Good morning
The uneasy calm continues although with each day it seems to become less uneasy. US and UK stocks had a decent day yesterday, Asian markets were a little more mixed. EUJRUSD and GBPUSD not far off levels seen this time yesterday morning, currently 1.0830 and 1.2330 respectively, GBPEUR back up towards the 1.1400 area.
BoEs Mann said yesterday that the job of central banks will become very difficult with inflation likely dropping due to lower gas prices but core good and services still trending higher. This potentially means rate rises even if headline inflation looks like its coming lower.
So for now we see some fairly stable currency markets but Bloomberg says a report by Bank of America suggests volatility could be just around the corner. I’ve not seen the report yet myself so only know they talk of a possible liquidity crunch but have no further details. Still plenty of interest in longer term downside USD trade ideas based largely on lower peak in Fed rates. Bear in mind though the recent adjustment in Fed forecasts seemed largely based on a possible banking crisis. If this is averted, will we see those higher peak rate forecasts return?
An interesting report from CITI looks at CHFJPY, currently 144.25, they see potential for this to drop to the 130 area. They have been bullish about Yen for a while, although it has lost a bit of its safe haven status in recent times. They see potential for this to return, particularly if the USD does fall out of favour. Another one to watch with interest. We do have data out of Japan overnight but these long yen ideas are more longer term so shouldn’t be affected.
As the Russian invasion of Ukraine continues, Finlands NATO membership could take step nearer become reality as Turkey vote today to approve their membership. Turkey have had a bit of a test recently, being friends with both Putin and the West, and no doubt pressure will have been on them from Russia to veto the membership.
US GDP is out this afternoon, UK GDP early tomorrow morning. These are the latest Q4 readings and are not expected to have moved from previous levels. Several Fed speakers on the calendar as well but I reckon they’ll be doing their best to no upset the apple cart before month and quarter-end.
Just in case things get a bit quiet, I’m very interested in this ChatGPT AI stuff. I did go onto their website and asked it the question ‘will GBPUSD go up or down’. It came back with an answer that looked very much like an email risk disclaimer along the lines of ‘GBPUDS can be influenced by many factors...’ and ‘speak to a financial advisor before making investment decision..’. I pushed it to take a guess but it told me it does not guess or provide speculative information and that I should consider all information before making any decisions.
At the moment we are used to believing everything we read online and we rarely question anything on Wikipedia. There seems little doubt this AI stuff will become increasingly relied upon in the future and it will become harder to distinguish human online conversation from and AI alternative. I think the government have released a white paper on AI technology and regulation, what a minefield that could be.
- 09.00 EU economic bulletin
- 10.00 EU consumer confidence
- 13.00 German HICP
- 13.30 US GDP, core PCE, initial jobless claims
- 18.45 Feds Barkin speaks
- 19.00 Feds Kashkari speaks
- 20.45 US TreasSec Yellen speaks
- 00.30 Japan unemployment, Tokyo CPI
- 00.50 Japan industrial production, retail trade
- 02.00 China non-manufacturing PMI
- 04.00 Feds Waller speaks
- 07.00 UK GDP