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  • richard evans

Calm before the storm?

Good morning

It was a pretty quiet start to the week, US dollar moved a touch lower, allowing EURUSD to trade up to 1.0255 and GBPUSD to 1.2080. Both those pairs are slightly off those highs but still hold onto most gains. In EURUSD, that 1.0255 area looks significant, having tested there four or five times in recent days, while in GBPUSD it is 1.2100 that I have my eye on. EURGBP currently 0.8480 (GBPEUR 1.1790), the highest GBP has been against EUR for a week. Perhaps EUR has been hampered by Moodys lowering their 2022 and 2023 EU growth forecasts to 2.2% and 0.9%, from 2.5% and 2.3% respectively.

BoJ minutes were out overnight, nothing in there to suggest they want to change their ultra-loose monetary policy any time soon. USDJPY 136.55, almost 300 pips lower than the highs earlier this month. EURJPY 139.55 and GBPJPY 164.45.

Another light calendar today could lead to a quiet session, perhaps we’ll see more USD weakness but this could be the calm before the storm. FOMC rate announcement tomorrow and a 75bps rise is on the cards so I’d expect USD losses to be limited. Some are thinking that the Fed may offer a smaller, 50bps rise tomorrow, which could see a little more pressure on USD, indeed if they did raise just 50bps I’d expect to see quite a solid reversal in USD.

I have seen a little bullish gold news, partly driven by the suggestion Fed may be less hawkish than they have been, but also by news that positions on Comex have turned net short for the first time since 2019. Gold moved from its low in April 2019 around $1265 to hit $1440 just a couple of months later and onto $1550 later in the year. Times were very different back then and please do not think I am forecasting a rally of $300, I am not. At the moment even a rally of $30 looks unlikely, unless Fed do surprise with a smaller rise tomorrow.

As I am sure many of you will have seen, Amazon has raised its price for Prime by around 20%/year. If I’m not mistaken the price for paying monthly has risen less than if you pay in one lump sum. Its changed from £7.99 to £8.99, I believe Amazon are trying to get more people onto a pay monthly scheme, that way when there is a £1/month increase I bet most people will continue with the service. For those of you who are Amazon Prime members, I bet you’d pay a few pounds more each month before you scrap the membership. I’m not even sure I use the benefits properly but I am currently watching something on Prime TV and I do like getting goods I have ordered delivered the next day, in some cases the same day. To be fair on Amazon, I bet their shipping costs have gone through the roof.

Finally, I had to change one of my barbeque gas canisters the other day. With the price of energy flying high I’d been wondering what I’d be charged for replacing the empty one. I’ve got a few so its not like I change them regularly but I’m sure last time I paid around £30 although I could easily be mistaken. Anyway, a price of £50 wouldn’t have surprised me this time, so I was pleasantly surprised to be charged £30. Might go and replace the others before prices rise. Mind you, historically the weather turns as soon as I replace a gas cylinder. Jst one week ago we were revelling in those 40 degree temperatures. We may only reach half that today. Sorry.

- 15.00 US consumer confidence, new home sales

- 00.01 UK BRC shop prices

- 02.30 AUS CPI

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