Good morning
US data releases will be one hour earlier at 12.30 or 14.00 london time due to the US clock changes that took place recently.
In addition, FX option expiries will be 14.00 london time, not the usual 15.00 london time.
This will be until Sunday 31st when we change our clocks in the UK.
Currency markets feel very much like they are in holiday mode already with majors confined to pretty tight ranges. The US dollar is a touch stronger, GBPUSD is 1.2610 and EURUSD 1.0790, its lowest level for over a month, GBPEUR therefore a bit higher at 1.1685. USDJPY is 151.35 having failed so far to break above 152.00.
The stronger USD was partly down to comments from Feds Waller who made it clear he was in no rush to cut rates and suggests holding rates at current levels for longer than previously thought could be a prudent course of action. This follows similar comments recently from Bostic who had said he sees just one cut this year. Still, the market continues to look at June as the most likely time for rate cuts from Fed, as well as BoE and ECB. Of the three, it is now the Fed who are sounding the least likely to cut.
The latest UK Q4 GDP data came out at an unrevised -0.3% as widely expected, and had little in the way of market impact. As we in the UK attempt to wind down heading into the long Easter weekend, we do still have some reasonable data to come from the US. GDP today is unlikely to be revised, the PMIs and sentiment data today are always of interest but the key is certainly the PCE tomorrow, an important inflation indicator for the Fed and certainly has market moving potential. Feds Powell speaks tomorrow afternoon, he’ll probably be less hawkish than the likes of Waller and Bostic but his comments will be closely watched coming so soon after the PCE release.
Another central bank this time RBNZ, has suggested the time for rate cuts was approaching. RBNZ Gov Orr said in a radio interview that more normalised rates were on the horizon. NZD dropped, GBPNZD traded above 2.1100 for the first time since Sept 2023, dragging GBPAUD a bit higher to trade just above 1.9400, weaker Aussie inflation and retail sales numbers overnight also helped push AUD lower.
China fixed USDCNY at 7.0948, once again considerably lower than actual levels trading in the market. USDCNY is now in the high 7.22s, while the offshore USDCNH is touching on 7.2600.
Gold has had another attempt at the $2,200 level as it did earlier in the week. So far that area has held but there does seem to be upside pressure and with the metal currently at $2,197 the risk of a break higher remains elevated.
In other news I see that Thames Water is making headlines again, as shareholders are refusing to add additional funds unless bills rise sharply. There is talk that the firm faces collapse. As you know I am no fan of water companies who have been happy to pay large dividends while neglecting important infrastructure investment. To highlight the state of our water, competitors is Saturdays Oxford v Cambridge boat race have been advised to not enter the water after high levels of E. coli were found.
With the UK holidays tomorrow and Monday this will be the last market report for a few days. We will of course be watching the markets and are available should any need arise. I’ve added the calendar for Friday and Monday below.
We do have a clock change this weekend so option expiries and US economic data releases will be back to the normal times next week and I won’t need to remember to put the time difference reminder at the top of this report.
Have a great weekend. Hoping it stays reasonably dry, the forecast isn’t great but if the last few days are anything to go by it could be sunny with spells of rain, rather than just constant gloom. It’s still pretty cold mind you although when the sun is out you do get a brief feeling of warmth. Surely we’re in for some proper sunny weather soon.
- 12.30 US GDP, PCE, initial jobless claims
- 13.45 US Chicago PMI
- 14.00 US Michigan sentiment survey, pending home sales
- 23.30 Japan Tokyo CPI, unemployment
- 23.50 Japan retail trade
Friday
- 12.30 US personal income/spending, core PCE
- 15.15 Feds Daly speaks
- 15.30 Feds Powell speaks
Monday
- 13.30 CAD S&P manufacturing PMI
- 15.00 US manufacturing ISM
- 15.30 BoC business outlook survey
- 00.30 RBA minutes