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  • richard evans

Decent weather at last, just as bank holiday is over!

Good morning

 

Welcome back after the long weekend.  I hope you enjoyed the great weather over the weekend, although Monday here was typically awful. Still, this week looks like we could see temperatures holding above 20°c until the weekend.  I’m away on a golf weekend at the end of the month and sincerely hoping we get some decent weather for that.

 

So, to the markets.  Well I sent an update late on Friday after the US nonfarms, ahead of the long weekend so I won’t go into much detail here but just to say since then the US dollar did try to weaken again but it was only brief and as I type GBPUSD is 1.2545, EURUSD 1.0765, pretty much where they were when I reported on Friday afternoon.  It is amazing how quickly the market can change its thinking.  Just one weaker nonfarms report and suddenly any idea of rate rises is forgotten and talk of rate cuts returns.  Feds Barkin said the full impact of higher rates has not yet been felt, while Feds Williams has said the next rate move will be down. 

 

Meanwhile, ECB officials are still eyeing a June rate cut and some still see a total of three cuts this year.  There is some concern as to how Fed actions may impact ECB decisions with ECB officials seemingly having differing opinions on this.  Time will tell.

 

USDJPY has ticked a little higher having touched as low as 151.85 on Friday, it is now 154.50, Japan still haven’t officially announced they did intervene last week but it is pretty obvious they did so.  The market obviously wary of further action, I think Japan will be pleased to have stopped the Yen depreciation that looked like it was out of control for a while. GBPJPY currently 193.65.

 

RBA left rates unchanged at 4.35% overnight but failed to add any new hawkish elements, instead seeming to err on the more neutral side, saying they see rates currently at the right level.  They see near term inflationary risks but still think inflation will fall back to target and see some deterioration in the labour market and household consumption.  They are not ruling anything out for rate moves but for now seem happy as they are.  AUD lost a bit of ground on the announcement, GBPAUD regained 1.9000 having touched a low of 1.8920 overnight.

 

China President Xi met some EU leaders over the weekend.  He and Macron got together, with Xi urging the EU to avoid siding with US over trade tensions and Macron appealing for fair rules for everyone in trade.  Xi did got to Hungary and Serbia, both of whom are not fully happy with Europe, erring more towards Russia perhaps, and have sought investment from China. 

 

Over the weekend we heard that Hamas had accepted a Gaza truce which would potentially see a permanent end to hostilities.  Israel are not convinced, saying the deal is watered down and far from what they see as necessary, indeed some sceptics are saying the Hamas announcement is just a soundbite to make the Israelis look like the ones who don’t want a deal.  In the meantime, a partial evacuation from Rafah is taking place as the Israeli military begins fresh attacks on what they say are thousands of remaining Hamas fighters, while Hamas have claimed responsibility for a rocket attack that killed four Israeli soldiers.  Peace talks are expected to resume today, Israel are under pressure from the international community to stop fighting but Israel are determined to ensure Hamas cannot rebuild their military power.  Have to see how this plays out.

 

The Championship ended at the weekend, Mark’s Leeds lost to Southampton while Ipswich won, which means Leeds will have to endure the pley-offs along with Southampton, West Brom and Norwich.  In the Premier league, Arsenal are still top but Man City are just one point behind with a game in hand.  Spurs have had a torrid time recently, losing four league matches in a row.  They’ll be hoping to change that on Saturday as they take on Burnly, who are fighting to avoid relegation.  Spurs are in danger of getting caught by a couple of teams below then if they are not careful. 

 

It’s a fairly light economic calendar today, and indeed much of the week remains fairly quiet.  However we do have the latest BoE rate announcement Thursday and UK GDP out early on Friday morning.

 

Have a great day, hope you get a chance to get outside and enjoy some of the decent weather.

 

 

-  10.00 EU retail sales

-  15.00 CAD Ivey PMI

-  16.30 ECBs Nagel speaks

-  16.30 Feds Kashkari speaks

 

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