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GBP brushes off soft retail sales numbers

Good morning

UK retail sales came out weaker than expected this morning, sending GBPUSD down from 1.2415 to 1.2375 although we’ve seen no follow through and as I type the pair is back up to 1.2395. GBP also dropped against EUR, from 1.1440 to 1.1420 but that too has recovered half of those losses. So overall, a pretty muted reaction to a weak set of data.

BoJs Ueda made it clear he still thinks ultra-easy monetary policy is the way forward for Japan, saying a weak yen had positives and negatives. Deputy FinMin Azakawa said that intervention is not used to stop yen depreciation but to slow excess volatility. This suggests it is unlikely they would intervene to stop yen from weakening if it were a slow and steady move. One would think this opens the door for USDJPY to push higher but as I type USDJPY has moved below 150.00, down from the 150.70 area to reach almost 149.50. I’ve found nothing that properly explains this move as yet.

Various Fed officials were speaking yesterday, most suggest it is a bit too early to claim victory on inflation while some are warning of signs that a slowdown is coming, which is very much in line with the forecasts of rate cuts I mentioned earlier in the week.

The US government has avoided a shutdown after an agreement was once again reached late in the day. I still don’t see how the government of the largest economy in the world can get itself into such a mess, it happens on a fairly regular basis and they never seem to be able to get themselves more organised. Other countries don’t seem to have the same problem.

Biden’s meeting with Xi came and went all very much as expected with Biden assuring China they were not looking to de-couple but at the same time making it clear US would continue to strengthen ties with other countries in Asia. EU’s von der Leyen has warned the EU it should start separating from China, saying China’s strategy is to reduce its dependence on the world while at the same time increase the worlds dependence on China. She’s not wrong. She also warns that a slower Chinese economy could place greater strains on EU-China relations.

EU inflation is on the calendar today but this is the second reading and is not expected to be revised from the initial data. We have some US housing data but ultimately the calendar is light. We have US thanksgiving on Thursday next week, usually worth writing off both the Thursday and Friday, so it could be a rather short week although there are various bits of economic data to get through such as CAD inflation Tuesday, UK and EU PMIs Thursday and US PMIs Friday.

Congratulations to Australia who made it to the cricket world cup final by beating south Africa. The final against India is on Sunday, could be a good match. Englands footballers take on the not-so-mighty Malta this evening and then play North Macedonia on Monday to finish the group off. Players will likely use the opportunity to push for their places at next years tournament.

Elsewhere, Las Vegas hosts an F1 race although some problems with the track have stopped practice sessions, I understand a drain cover got loose and damaged one of the cars. I’m sure all will be sorted in time for qualifying. Have to say, I’d love to be in Vegas for this race. If I’m not mistaken, the race is early Sunday morning., it should be finished just in time for the cricket. That’s my Sunday morning sorted! The leaves can wait.

Have a great weekend…

- 10.00 EU HICP

- 13.10 BoEs Ramsden speaks

- 13.30 US building permits, housing starts

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