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  • richard evans

All eyes on central banks this week

Good morning

US inflation came out in line with expectations Friday. USD actually weakened on the release, it would seem that positioning was set for an even higher print, those positions unwound despite the highest inflation release for nearly forty years. It is certainly enough to keep Fed on track for increasing the pace of tapering at their meeting this week.

Today is a quiet day data-wise but it livens up later in the week. The FOMC rate announcement comes on Wednesday, then on Thursday we have BoE, ECB and SNB meetings, with BoJ in the early hours of Friday morning. UK, EU, and CAD inflation, US and China retail sales, Aussie employment plus some PMI data all out later in the week, No rest for the wicked, although I do expect we’ll start getting into something of a holiday mode later in the week as Christmas nears. Most kids will be breaking up from school this week, although the reality is that given Christmas day falls on a Saturday we do actually have a pretty full work week next week. Not sure how much work will actually get done mind you.

The UK issued a few more fishing licences which suggests some progress is being made, although headlines in the Telegraph suggest the French will still blockade ports just before Christmas in protests over the number licences issued, potentially affecting supplies to the UK. Elsewhere in the EU, Poland is threatening to stop payments to EU budget if EU continue to push Poland on rule of law

No surprise that Omicron is still making many of the headlines, there seems little doubt that we are at the start of what could be a tidal wave of cases, Omicron already represents a third of Covid cases in London. UK PM Johnson puts our Covid alert up to level four, from level three. He says every adult will be offered a booster jab by the end of the year and adds that there is no evidence Omicron is less severe, there are already Omicron cases in UK hospitals.

So, while FOMC look set to increase the pace of tapering, Omicron offers the BoE a perfect reason to keep rates on hold. GBPUSD did manage to trade up around 100 pips from its recent lows, hitting 1.3270 on Friday but it is now back to 1.3230 and I am a little worried about GBPUSD this week, last week we took a look at some short–term downside GBPUSD trades just in case. Call for details.

Other issues in the news include Russia’s intentions over Ukraine, with G7 saying any military aggression will face severe consequences. Not sure Russia care that much although I still cannot help thinking all this is partly to do with getting the Nord Stream 2 pipeline approved. Iran nuclear talks also in the press, not sure anyone really thinks we’ll see any concrete agreements there. S&P cut Turkey rating to negative, helping push USDTRY to all-time highs around 14.45. EURTRY is up at 16.25 and GBPTRY at 19.10.

Onto more domestic news. First I can report the Virgin Media engineer turned up as scheduled on Friday, replace a couple of cables and the router in my house, and a quick broadband speed test suggests I am now getting over 400mbps. Pretty good. For me, my emails may come in a little quicker. I guess the kids will see more benefits with their online gaming and TV streaming.

Finally, news of our cup match this weekend. Up against a very tough opponent, I wasn’t expecting our winning streak to necessarily continue. However, not only did we match them, actually had more chances and really should have wrapped the game up in normal time. As it was, it finished 1-1. Went straight to penalties, which we won in sudden 5-4, our keeper saving their last two penalties. A great win and on we march in yet another cup competition. It all gets very difficult from here but a major concern now is not whether we progress further but whether we actually have enough time to finish our league campaign by the send of the season. After our match next weekend we’ll have played just four league matches this year. I sense a busy April/May.

- 16.00 BoCs Macklem speaks

- 17.00 UK financial stability report

- 00.30 AUS NAB business confidence

- 04.30 Japan industrial production

- 07.00 UK unemployment

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