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  • richard evans

Eyes on central banks

England managed to win yesterday to leave them top of the group. They were reasonably dominant but again lacked a bit of flair going forwards. Its another clean sheet, looks like we’ll have to defend our way to victory. I do worry what will happen though when we meet more accomplished opposition, many of whom are playing later today. Sun and football, sounds like a perfect day.

Enjoy the sunshine today, looks like the rest of the week and the weekend will be a little wet, hopefully things start warming up into next week.

USD – Fed officials seem to be doing their utmost to calm the markets after last weeks post-FOMC excitement. Williams and Mester both say any rate rise is still a very long way off while Powell sticks with the idea that although inflation is higher than expected it is still regarded as transitory. He does point out though that he doesn’t know what time period he’s referring to when he says transitory. I’d imagine a few months at most but in a longer term view, which is how I’d expect a central bank to work, a couple of years could be deemed as temporary. Powell has said 5% inflation would be extreme and would likely require some action. Watch this space. For now dollar has lost a lot, but not quite all, those post-FOMC gains.

EUR – EURUSD at 1.1935, pushed higher by the weaker dollar. PMIs this morning may offer some additional support if they follow the German numbers that have just been released which were a little better than expected although I note the French PMIs earlier were on the softer side. Limited market impact will be my guess.

GBP – GBPUSD trades up to 1.3980 helped again by dollar weakness and also the idea that we may be opening up some time in July. Some support for GBP ahead of tomorrows BoE rate meeting as well, I wonder if the market are beginning to wonder if we’ll see some more hawkish comments from central banks in the coming weeks. GBP doing well against EUR as well, EURGBP has been down to 0.8535 (GBPEUR 1.1725) which marks a new high for GBP since early April.

AUD – A little interest in AUD this morning as CBA have brought forward their forecast for an RBA rate rise to Nov 2022. Remember, just last month RBA said they were looking at rate rises no sooner than 2024, another example perhaps of central banks and markets getting a bit out of line. RBAs AssGov Ellis was speaking, saying Aussie recovery is exceeding expectations but RBA will continue to provide support until inflation and employment are at target levels

- 08.30 ECBs de Guindos speaks

- 09.00 German markit manufacturing, services PMI

- 09.30 UK markit manufacturing, services PMI

- 13.30 CAD retail sales

- 14.00 SNB quarterly bulletin

- 14.10 Feds Bowman speaks

- 14.45 US markit manufacturing, services PMI

- 15.00 US new home sales

- 19.00 ECBs Lagarde speaks

- 21.30 Feds Rosengren speaks

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