Good morning
More USD weakness for much if the day yesterday, GBPUSD reached a heady 1.2550 in the morning although the pair did drift off in the afternoon, preferring to focus on the stronger than expected ADP employment number than the lower US ISM services PMI headline. It ended the London session around 1.2515. EURUSD reached 1.0440 at one stage yesterday but was also lower a touch by the close, around 1.0420. EUR made a small bit of ground on GBP through the day, reaching 1.2000 at one stage although it was 10 pips or so up from those lows by the close.
The US dollar remained weak until the early hours of this morning when USD buyers remerged and sent both GBPUSD and EURUSD lower once again, reaching 1.2455 and 1.0365 respectively. Some are putting this strength down to comments from US Treasury Secretary Bessent who said Trump was not calling for Fed rate cuts.
USDJPY saw more impact from the weaker ISM PMIs, the pair traded down to 151.80 overnight, helped by further talks of faster rate rises through 2025, although has since recovered to 152.60 on this mornings USD push higher.
Aussie trade surplus was healthy but at AU$ 5.1bn was well below expectations which were in the AU$7bn area. The previous months data was revised lower but overall the impact on AUD has been minimal, AUDUSD falling to 0.6260 more in line with this USD strength, while GBPAUD has slipped to 1.9900 from an overnight high of 1.9950.
Trump has explained his recent Gaza announcement in perhaps better detail, suggesting the citizens of Gaza only need to relocate temporarily while US go in, clear the rubble and rebuild until the time is right for them to return. Trump’s attention is also on Ukraine where he is hoping to broker a peace deal that is likely to give Russia the ground it has already taken with an assurance somehow that Russia will not attack again.
Today brings more EU retail sales and US jobs data, initial claims and Challenger cuts, but the main event will be on BoE where a 25bps cut in rates to 4.5% is widely expected with a near unanimous 8-1 vote. It’s not easy for BoE, lower growth and an uncertain economic outlook should make a rate cut a simple decision but inflation still persists and there is a chance we’ll see more BoE officials siding with Mann who is likely to dissent, calling for no change in rates. Regardless, I’d expect BoE to signal some caution over further rate cut expectations.
Through the afternoon we’ll have some central bank speakers from ECB and Fed, then in the early hours of tomorrow morning we’ll have the latest RBI rate announcement. A 25bps cut to 6.25% looks on the cards. INR has weakened since the turn of the year, with USDINR moving up from 86.50 to a high of almost 87.60, while GBPINR has been more volatile, seeing a range between 104.50 and 109.50, give or take a few points. Indeed this week alone we have seen a move from 106.10 up to those mid-109s.
Newcastle beat Arsenal last night to take them into the League Cup final, their opponents will be decided this evening as Spurs take on Liverpool/ Spurs have the advantage of a one goal lead from the first leg but we all know there is quite a vast difference between the current performance levels of each side. Liverpool do need to score, I don’t think that will be too difficult for them but the longer Spurs can hold out the more risks Liverpool may need to take. You won’t be surprised to hear I’m not overly confident.
Ah, and Leeds extended their lead at the top of the Championship with a win over Coventry last night. Mark will be ion a good mood today if anyone has any small, annoying balances they need us to take care of….
Have a great day
- 10.00 EU retail sales
- 12.00 BoE rate announcement
- 12.30 BoE press conference
- 12.30 US challenger job cuts
- 13.30 US initial jobless claims
- 15.00 CAD Ivey PMI
- 16.15 ECBs Nagel speaks
- 19.30 Feds Waller speaks
- 20.30 Feds Daly speaks
- 22.00 BoCs Macklem speaks
- 04.30 RBI rate announcement
Commenti