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  • richard evans

BoJ talk of rate rises for first time since 2016

Good morning

Fed officials continue to sound hawkish, Daly and Waller see three rate rises this year while Harker and Evans both think we could see four. USD remains at the lower end of recent ranges ahead of retail sales, industrial production and Michigan sentiment survey this afternoon.

Reuters reports that BoJ have started talks on how they may be able to bring around rate rises when they are eventually required. JPY did move a little higher with USDJPY moving from 114.70 yesterday to 113.80, EURJPY from 131.45 yesterday to 130.50 now. Japan have negative rates since 2016, despite this inflation has failed to show gains.

UK GDP was stronger than expected this morning, the trade balance was also better although still a pretty sizeable £11.33billion deficit. GBPUSD still firm up at 1.3735, EURGBP pretty much unchanged at 0.8350 (GBPEUR 1.1975). EURUSD firm at 1.1470 after ECBs de Guindos commented that inflation is not as transitory as thought a few months ago. This goes against Lagardes own comments earlier this week, she speaks again this afternoon so we’ll see if she makes any reference to this.

Talks between Russia and NATO have so far been unsuccessful, with Russia going so far as to say they could even deploy military assets to Cuba in an attempt to forced the West to meet Russian demands over Eastern Europe. That doesn’t sound great.

Covid isolation period has been cut to five full days after a couple of negative flow tests with effect from Monday in an attempt to ensure the workplace has enough staff. Daily Covid cases numbers continue to drop in the UK although still come in at over 100,000. This is heading in the right direction but I do wonder whether we’ve seen a drop in official tests which could be partly responsible for the lower number. Some easing of the Pan B restrictions is likely to be seen as Omicron risks subside. Fr4ance meanwhile are relaxing travel rules for passengers from UK.

UK parliament faces more problems. First the string of parties that seem to have been held despite Covid restrictions being in place. Now I see a warning over a Chinese agent infiltrating Parliament to interfere in UK politics. The Chinese deny this but there is no doubt the ‘agent’ paid substantial sums of money in donations to certain politicians. Has this news just emerged to deflect attention away from the partying headlines?

Onto sport ahead of the weekend. Lets look down under first where England got off to a great start against Australia in the fifth Ashes test. Far too early to be confident mind you. Djokovic has had his visa cancelled once again by Australia, he can appeal but if I were him I’d pack my bags and leave. Surely he wouldn’t be received well by the Aussie public if he were to play. In football, a mighty contest is set to take place Sunday. Yes, my under 15s are playing in the county cup that was postponed from last week. Oh yes, and its Spurs v Arsenal…..

- 10.00 EU trade balance

- 13.15 ECBs Lagarde speaks

- 13.30 US retail sales

- 14.15 US industrial production

- 15.00 US Michigan sentiment survey

- 16.00 Feds Williams speaks

- Monday

- 02.00 China GDP, retail sales, industrial production

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