Good morning
ECB bit the bullet and raised rates 25bps yesterday which showed some determination to battle inflation although it was pretty clear they expect this to be the last rate rise of this cycle. The door is left open should another raise be required but it is unlikely. This was certainly a dovish rate rise, I don’t like the phrase at all but I guess it sums up the move this time.
EUR dropped, EURUSD hitting 1.0630 after the London close, just below the lows we saw back in May, now we go back to March 2023 to see levels below here. 1.0520 is, for me, the next key downside level. Currently 1.0660, perhaps the FT article suggesting some ECB members are considering a Dec rate rise has offered some support to the single currency.
US retail sales came in a bit better than expected yesterday which helped the move lower through the afternoon, US dollar also stronger against GBP with GBPUSD moving from the 1.2500 area down to 1.2400, now 1.2425. GBPEUR holding in the mid-1.16s shows this is predominantly a USD move. Just two months ago we were up at 1.3140 and it is frankly difficult to see what is really different now to back then. UK inflation expectations out this morning will be of interest, but after the ECB rate move I think we are more likely to see a 25bps rise from BoE next week. Whether this offers much in the way of support for GBP remains to be seen, certainly if it came with a similar message that it could be the last move in this cycle. .
China retail sales came in much better than expected overnight. It sounds terrible but I don’t really believe much of the data out of China, although I have nothing to back this feeling up. Mind you we can all see where USDCNY trades and where they choose to put the USDCNY fix. This time it was down at 7.1786, when the market is nearer is over 1000 points higher.
The economic calendar today is not too busy although each does bring with it potential to move the markets, but it is difficult to imagine we’ll see any great turnaround.
Looking ahead to the weekend, make sure you enjoy the sunshine today and tomorrow, after that it looks colder and certainly wetter. The last ODI between England New Zealand takes place today, England are currently 2-1 up in this series after a heft victory ealier in the week, helped in no small part by an incredible 182 from Stokes.
The Premier League restarts after the international break, Spurs will be looking to continue their winning ways as they face recently promoted Sheffield Utd who are struggling to find any form in the top flight so far. And of course we have the rugby world cup to enjoy, England take on Japan on Sunday in a match England should win but will be harder than you’d think.
Rugby is having similar issues to football’s VAR system. England had a player sent off for a dangerous tackle in their last match, France played yesterday and it was clear to most people that they should have had a player sent off after a horrific looking shoulder tackle but the officials decided he should remain on the field. I’m not against refereeing by video but as with all decisions in all sports, there needs to be consistency.
Finally, NASA yesterday confirmed the existence of UAPs (unidentified anomalous phenomena) but that doesn’t mean aliens exist or that the unexplainable sightings are from outer space. There are certainly instances where UAPs have been seen and reported and there is no reasonable explanation but NASA are making it clear this doesn’t mean we have had visitors from other planets. They are not, however, ruling this out.
- 09.30 UK consumer inflation expectations
- 13.30 US NY state manufacturing index
- 14.15 US industrial production
- 15.00 US Michigan sentiment survey
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