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  • richard evans

ECB, BoC rate meetings, and US nonfarms this week

Good morning

 

Welcome to June, the last month of Q2 and indeed of H1 2024. 

 

Fridays US PCE deflator came in pretty much in line with expectations. USD weakened briefly on the headline, perhaps from the relief it hadn’t come out higher.  I’m surprised the much weaker than expected Chicago PMI number later in the afternoon didn’t send USD lower still, instead by the close GBPUSD was around 1.2735, with EURUSD 1.0845.  Both are pretty much at those levels now, which brings GBPEUR to 1.1730, off last weeks highs in the 1.1770 area, a level that is becoming more and more crucial each time we fail to break above it.

 

Feds Kashkari has said rates should stay on hold for an extended period of time, no major surprise with those comments.  We are entering the blackout period for Fed officials ahead of the Fed meeting next week. 

 

USDJPY is off last weeks highs although at 157.24 it is still at the higher end of the recent ranges and not too far off the 157.70 area that capped last week.  GBPJPY is holding just above 200.00.  Eyes obviously still on Japan for any signs of intervention.  Data released last week does confirm Japan intervened, likely on 29th April and 2nd May, selling some US$63bn.  They could well do so again, certainly any push higher in USDJPY is likely to increase the chances of intervention, we may need to see a US rate cut and a Japan rate rise to really stop the weak Yen theme. Until that happens, Japan will continue to warn that they are watching levels closely. 

 

ZAR weakened as ANC lost its majority in the South African elections. GBPZAR is now just around 24.00, the highest level since late March.

 

France has been downgraded by S&P from AA to AA-, a rather embarrassing moment for Macron.  S&P cited failed plans to get the budget deficit in order, France insists it is still getting on with the job and will meet the EU3% target.

 

Pressure is growing on Israel to accept a ceasefire proposal if Hamas agrees to it.  Israel have said they will accept nothing if it includes Hamas retaining power in Gaza but the international community is looking for Israel to accept the proposal.

 

US manufacturing ISM this afternoon, the key piece of data in what could be a quiet day as we await the bigger news later in the week in the form of ECB rate meeting and US nonfarm payrolls.

 

Of course, the new you’re all desperate to hear about is how the golf weekend went.  Well, I didn’t win, but I did survive it.  We are getting older, there is less desire among some of our members to stay up partying and more desire to have early nights.  Doesn’t make it much easier for me.  I played OK, but managed once again play well on one nine, and not well on the other nine.  No rhyme nor reason to that, just a reminder that I’m not as good as I think I am.  The fitness side was less of an issue as we had buggies on a couple of rounds.  I prefer walking but it’s a fairly hilly course and I’d have been in a far worse way had I had to trudge round for a few hours each day.  Weather-wise we couldn’t ask for more, it stayed dry and yesterday was an absolute scorcher.  All in all, a great weekend.

 

Have a great day

 

-  14.30 CAD S&P global manufacturing PMI

-  15.00 US manufacturing ISM

-  00.01 UK BRC retail sales

 

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