ECB fail to inspire markets
ECB was something of a non-event, certainly as far as currency markets were concerned. ECB did reduce the pace of asset purchases under PEPP although Lagarde did her best to make it clear this was not a taper. The bigger policy decision will have to wait until December. EURUSD at 1.1840, a mere 15 pips higher than this time yesterday despite the hype over ahead of the ECB meeting, and not moved by german inflation data this morning although that’s not a surprise given it came out exactly in line with forecasts. Lagarge speaks again later this morning at the Eurogroup meeting of EU finance ministers.
GBP having a pretty decent run at the moment, GBPUSD trading up to 1.3875 as I type having been in mid 1.37s yesterday morning, GBP also stronger against Euro with EURGBP now 0.8535 (GBPEUR 1.1715). GBP unaffected by the lower than expected UK GDP numbers out this morning.
BoCs Macklem spoke at the rate meeting with some details as to how BoC will gradually end their QE program but add that the economy is not yet in the right place for this. Macklem did suggest that interest rates could begin to be raised before QE had ended, but this is still some way off. USDCAD nearly 100 pips lower than this time yesterday at 1.2625 but part of that move will be down to US dollar weakness.
China in the press for releasing a chunk of its oil reserves with the aim of lowering oil prices. US WTi did move lower, from nearly $70/barrel to $67.75 or so but is now back up at $68.80. I’m not sure what level China were hoping for and as with much market intervention it probably won’t have a lasting effect, unless the market takes the view that China have huge enough oil reserves to continue their intervention each time oil prices near the $70 mark. That could deter oil bulls.
China also in the news as Biden and Xi had a phone call for the first time since February. I’m not sure if the oil action had any influence on the phone call. Relations haven’t been great between to two nations, whether this will make any change remains to be seen. I’m not convinced China in particular have much interest in being told how to act by the US, Xi has made it clear he thinks US attitude is to blame for poor diplomatic relations. One phone call will not change that.
So the weekend is almost upon us once again. The weather won’t be a repeat of the high temperatures we enjoyed last week but that’s not necessarily a bad thing given my young footballers begin their campaign to win the league this weekend. We have a number of new, strong players and we are playing a team who we have previously had close matches with, so this will be a bit of a test to see whether we have really improved. I’m looking forward to it with interest, have to say I’m also a tad nervous. Oh, and the Premier League resumes. Can Spurs keep their 100% record? Of course they can.
Finally, a small reminder that tomorrow marks the 20th anniversary of the appalling terror attacks in the US. I, as do most people, clearly remember where I was when the news broke that a plane had hit one of the twin towers. Horrifying does not begin to describe it, and many of my City colleagues knew friends or colleagues who were lost that day. A terrible, world-changing event that I sincerely hope we never see the likes of again.
- 10.30 ECBs Lagarde speaks
- 13.30 US PPI
- 13.30 CAD unemployment
- 15.00 US wholesale inventories
- 20.30 CFTC position data