• richard evans

Brace yourselves, its going to be hot......

Good morning


It’s a light calendar today which is probably just as well given the fact the country, or at least the south, will most likely shut down as temperatures hit 40 degrees. I’ve experienced that a couple of times before, once in Spain and once in America, but never in the UK. We don’t do extremes of weather very well here, a little bit of snow can bring the country to a halt, but I have to say 40 degrees is really quite something else.


Schools are being closed early here, some are closed all day, as we are urged to do as little as possible. I can cope with that. I may however struggle to cope with temperatures up at 30 degrees at midnight tonight.


So, to the markets. Last week the strong dollar dominated proceedings, GBPUSD trading from a high around 1.2050 down to 1.1760, below the lows seen over the Brexit vote, and EURUSD from 1.0220 to 0.9950 to break parity for the first time since Dec 2002. By the time the week ended GBPUSD had recovered to around 1.1865 and EURUSD was near 1.0100. This morning we have seen some US weakness, sending those pairs to 1.1940 and 1.0140 respectively.


The USD weakness we are seeing is being put down to a realisation that the next Fed move is more likely to be 75bps than a full 1%, after comments from Fed officials and an article in the WSJ over the weekend.


NZ inflation numbers came out stronger than expected overnight at 7.3% versus consensus of 7.1%. NZDUSD moved higher from 0.6150 to 0.6200 but came under a bit of pressure in the very early hours this morning, trading back to 0.6150, before this latest USD weakness helped it push to 0.6170. AUDNZD at 1.1060.


In politics, Rishi Sunak seems to have come out on top after the televised TV debates, moving to favourite at the bookies with Mordaunt and Truss trailing in second and third respectively. In Italy, Draghi has been urged to remain in office over fears of widespread instability should he go. He is due to speak on Wednesday. So far he still sounds determined to resign.


Putting the weather to one side, we should be in for a quiet-ish day if the calendar is anything to go by. However there will be plenty of excitement to come, UK unemployment numbers tomorrow morning, UK, EU, Japan, and CAD inflation, UK retail sales, US housing data, NZ trade balance, and a host of PMIs later in the week.


The highlight however is likely to be the ECB rate announcement on Thursday where a 25bps rise is widely expected. We also hope to see some details of the anti-fragmentation tool the ECB are hoping will ease most concerns for the EU region.


Enjoy the day, stay cool if possible and fingers crossed the internet and power cables don’t melt!


- 10.00 BoEs Saunders speaks

- 13.15 CAD housing starts

- 15.00 US NAHB housing market index

- 00.01 UK rightmove house prices

- 02.30 RBA minutes

- 03.00 RBAs Bullock speaks

- 07.00 UK unemployment


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