Good morning
We had pretty tight ranges yesterday as the various PMIs came out broadly in line with expectations. EU were almost spot on, UK were a smidge lower and US were fractionally better, as were the US initial claims and home sales data, but none were far enough away to really push the markets to any great extent.
EUR, helped by reduced expectation of a 50bps ECB rate cut next month, had a slightly better day of it than GBP, perhaps the latter was affected a touch by the weaker PMIs. GBPEUR slipped back below 1.2000 around the London close, reaching 1.1980 overnight. EURUSD is now up at 1.0820, GBPUSD currently 1.2970.
Overnight, UK consumer confidence moved lower again, now at -21, fears of tax rises in the upcoming budget partly to blame. I’ve been reading about UK chancellor Reeves plan to change debt rules to free up funds for infrastructure spending. This could amount to billions of pounds. Am I right in thinking that this is simply borrowing even more money, while ‘promising’ to bring down debt levels. Really, I’m no expert in government financing but something doesn’t sound right there. And even if it was, wouldn’t it be inflationary? Is there a risk of a Truss/Kwarteng type experience?
USDJPY fell back further, trading as low as 151.45 this morning, the market perhaps looking at reports of meeting between Japan FinMin Kato and US TrSec Yellen, something that no doubt raises the prospect of intervention with US approval. Let’s not get ahead of ourselves though, USDJPY is around 1,000 points below its highs earlier this year. While Japan won’t want the yen to depreciate, these are probably not levels for them to act. Japan elections over the weekend, results should be in by Monday morning.
CAD did weaken again with USDCAD trading as high as 1.3865, just surpassing the Wednesday highs. It did fall back a little , 1.3855 has capped the upside overnight, although with a low around 1.3845 we’ve seen ridiculously tight ranges.
We’ve had an interesting week this week, mostly led by USD strength but if we compare levels right now with those from last Friday’s close, GBPUSD is 70 pips lower while EURUSD is just 40 pips lower. Lets not be complacent however. Next week is pretty massive. We have the UK budget on Wednesday, goodness knows what that will bring but I’m not looking forward to it.
From the US we will have the usual line up of employment data including JOLTs, ADP, initial claims, Challenger job cuts and then the main event on Friday, the nonfarm payrolls. But that’s not all, US GDP, core PCE, and ISM PMIs are all on offer next week. From the EU we’ll have the latest GDP and inflation numbers, throw in Aussie inflation and a BoJ rate announcement and we’ve got a pretty full week, most of those releases come later in the week so perhaps we’ll have a calmer Monday and Tuesday, but its full on after that.
Spurs managed a win yesterday, they looked good in the first half but a bit more fragile in the second. Still, a win is a win, and Spurs remain overall favourites to win the tournament, but they’ll have to improve, that’s for sure. Galatasary away in a couple of weeks, that’ll be a tougher test. In the meantime, Spurs take on Crystal Palace on Sunday, the pick of the weekend matches should be Arsenal v Liverpool.
In cricket, having said England were struggling in the latest test match, they ended up all out for 267, while Pakistan are currently 187-7. Perhaps we didn’t do so bad after all. Can’t see this going to five days!
The clocks change this weekend, going back an hour which I think means we get an extra hour in bed but then I always end up feeling tired come the end of the day. The US don’t adjust their clocks until the following weekend which means heir data releases will be one hour earlier for a week, as will currency option expiry times.
Have a great weekend as and when it comes. We might get some fog Saturday and some sunshine Sunday, but it looks like it will be broadly dry. The garden is covered in leaves but the trees still look full, I’m going to have my work cut out over the next few weeks. Still, therre are worse things to do.
Oh, by the way, its November next week and it’s Christmas in two months! When did that happen?
- 09.00 German IFO
- 13.30 US durable goods
- 13.30 CAD retail sales
- 15.00 US Michigan sentiment survey
- 16.00 Feds Collins speaks
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