All quiet, USD remains firm, oil lower

Good morning

We had a bit more USD strength yesterday although GBP and EUR are now back to pretty much where they were this time yesterday morning, 1.3180 and 1.1360, with GBPEUR just above 1.1600.  AUD had a brief push higher on better employment numbers overnight but downward revisions to previous months data saw AUD revert to pre-release levels, 1.9120 against GBP and 0.6890 and 1.2220 against USD and NZD respectively.  USDJPY remains in the high 161’s despite more jawboning from Japan officials.  Equities are a little mixed but oil prices fell through the day, WTI just a touch under $70 now with Brent $73.25, bringing them even closer to pre-war levels.

Otherwise, there is not a huge amount to report.  Chinese firms have been accused of stealing US AI technology, not exactly a huge surprise from the country that will replicate anything and everything.  Andy Burnham is in the papers as he will be for some time having given a brief insight into his ideas for a future Britain, we’re still expecting him to make a broader speech next week.

US core PCE is the main event on the calendar today although as I have said already this week we know that although it was one of the Fed’s key inflation indicators, incoming Fed chair Warsh prefers other measures so over time the impact this release has may become more muted.  For now, it remains a potential market mover, perhaps more so if it surprises to the downside this time.  US GDP also on the calendar but this is the third release of Q1 data so shouldn’t have a major impact. 

I’m out of the office for the next couple of days so I’ve added in Friday’s calendar as well, US michigan sentiment the main event tomorrow but worth noting any policy thoughts from the various central bank officials who are speaking over the next couple of days.  If Warsh has his way and reduces forward guidance, comments from Fed officials could be watched a lot closer in the coming months.

In other news, Scotland are almost out of the world cup after losing to Brazil yesterday which leaves them third in their group, just an outside chance that they make the knockout stages.  England will be playing Saturday evening in the final match of their group, looking for a much needed win after the draw against Ghana.  We are as good as through, it is really just a case of who tops the group.  Money has to be on England to beat Panama, surely?

In cricket, the third test match between England and New Zealand begins today with England hoping to produce a far better performance than we saw last week during their defeat in the second test.  It will be a hot day in the field today and tomorrow but I see there is some rain forecast for the weekend which could disturb play.  Let’s call it a draw then, shall we?  Good odds on that at 7-1.

Of course a lot of talk here is about the exceptionally high temperatures and although I can’t say I agree with school closures and the like I think it is worth noting the difference between temperatures around 27°c and 35°c.  They don’t sound so different, both a very warm.  But anyone who has experienced this level of heat in the last day or so will attest to the fact that there is a significant difference.  The humidity doesn’t help, but regardless it has been very hot indeed.

I’m heading to the south coast today for a small family get together, temperatures there in the high 20’s rather than mid-30’s which will be a bit of a relief, I’m assuming the hotel will have air conditioning as well which should mean a better nights sleep. 

So, no report tomorrow, I’m back on Monday.  Next week’s calendar brings UK GDP and EU inflation, as well as a host of US employment data including the all-important nonfarm payrolls.  They will be released a day early on Thursday due to Friday being a US holiday for independence day.  I wonder what film we’ll be watching over the weekend?

I have a good friend and his family arriving here from New Zealand to stay for a month or so on Monday.  I’m very much looking forward to that although I have to say that when we get together it is rarely a particularly healthy event, but very good fun.  He’s a regular reader of this report so he’ll know exactly who I mean.  Looking forward to seeing you mate.

Have a great day, and a great weekend as and when it comes…

-  09.00 ECB economic bulletin

-  11.00 ECBs Lane speaks

-  13.00 ECBs Cipollone speaks

-  13.30 US core PCE, GDP, durable goods, initial claims

-  16.00 ECBs Cipollone speaks

-  20.40 Feds Williams speaks

-  23.30 Feds Goolsbee speaks

Friday

-  00.30 Japan Tokyo CPI

-  09.30 ECBs Nagel speaks

-  15.00 US Michigan sentiment

-  15.30 Feds Williams speaks

-  16.30 Feds Kashkari speaks

-  17.00 ECBs Vujcic speaks