Good morning
A stronger than expected US retail sales number pushed the US dollar a touch higher yesterday, GBOUSD traded down from 1.2980 to 1.2940, EURUSD also dropped from 1.0905 to 1.0875. However the move didn’t last long, by the London close the USD had regained some of those losses and overnight it was back pre-retail sales levels.
This morning we saw the latest UK inflation numbers, all very much in line with expectations, but firm enough to send GBP higher, with GBPUSD now just a few points away from that 1.3000 level that has capped the upside since late last week. GBP is higher across the board, GBPEUR is 1.1920, GBPAUD near 1.93, GBPNZD 2.14 and GBPCAD pushing towards 1.7800. I wonder if we’ll see 1.30 break higher while I’m writing this report. I wouldn’t be at all surprised, I’ve seen a few reports already suggesting an August rate cut from BoE is less likely now. Not sure how that can be when the numbers come out as expected mind you.
We did have CAD CPI yesterday which came in on the softer side of expectations. CAD initially pushed a touch higher before losing ground, ending up pretty much as pre-release levels before this mornings UK inflation numbers sent GBPCAD higher. There is a lot of expectation of a BoC rate cut next week, I thought they’d have kept them unchanged this time but the market seems to be more in favour of a second consecutive cut.
Overnight we got the latest NZ inflation numbers. The headline was actually a touch lower than expectations, but elements of the headline number still show risks to the upside. Non-tradeable inflation, something RBZN have previously warned about, came in at 0.9%, above the expected 0.8%. The mixed nature of the release will allow RBNZ to fit the results into whatever narrative they prefer.
A lot of talk around Trump, his choice for VP and his priorities should he become President. First, Trump has warned the Fed they should not move rates ahead of the November election. He has said Powell could stay in charge of the Fed until his tenure runs out in 2026, if he ‘does the right thing’. A not very veiled threat, and I’m not sure Powell will appreciate taking orders from Trump. I’m not sure the reason for this, perhaps he wants to be in charge and be able to say he brought rates down, assuming he gets in of course. Otherwise, Trump has got JPMorgan’s Dimon in his sights to take over.
Vance, Trumps VP choice, has voiced opposition to US funding Ukraine, saying US should be focussing on China, who he says is the real threat. Trump has talked of a Ukraine ceasefire if he does get in, my guess is he’d be pushing Ukraine to accept losing some of the ground Russia has taken in their invasion.
Talking of China, the EU voted on China EV tariffs. Twelve members voted for, eleven abstained and four voted against the proposals. That’s a pretty mixed bag. Meanwhile in France the government has resigned but will stay in place until a replacement is secured.
Gold has taken advantage of the generally weaker US dollar, trading up to new highs. It reached US$2,482/oz overnight, last month we’d seem limited central bank purchases and prices moved below $2,300 for a while, but I wonder whether China re back on the gold-buying trail once again. US$2,500 a clear target. Shame Gordon Brown sold a huge chunk of UK’s gold reserves below $300 25 years ago. Hindsight is a wonderful thing, but I remember much opposition to the sales at the time.
Still, we are in a new era, and another Labour government. We will have the State opening of parliament today and a chance perhaps to understand the new governments political and economic plans. I wonder whether gold sales are on their agenda. A better trade at $2,500 mind you!
EU inflation is out this morning, while the UK’s latest unemployment figures will be out early tomorrow morning. We also have the ECB rate meeting tomorrow. I’ve included calendars for Thursday and Friday below as I’m due to have a small shoulder operation tomorrow morning, nothing major, just a tweak, but I’m not sure what state I’ll be in Friday.
I’ve been complaining a lot recently about the weather, the next couple of days though are looking pretty decent, with temperatures up to 25°c, perhaps even higher. Typical, I’ll be lying in a hospital bed. Fear not though, temperatures will be back to the 20°c area by the weekend!
Have a great day
Ah, by the way, 1.3000 has finally given way for the first time in almost exactly one year. GBPUSD is 1.3010 as I type….
- 10.00 EU HICP
- 13.30 US building permits, housing starts
- 14.15 US industrial production
- 14.35 Feds Waller speaks
- 19.00 Fed Beige book
Thursday
- 00.50 Japan trade balance
- 02.30 AUS unemployment
- 07.00 UK unemployment
- 13.15 ECB rate announcement
- 13.30 US philly fed survey, initial jobless claims
- 13.45 ECB press conference
- 17.45 Feds Logan speaks
- 23.05 Feds Daly speaks
Friday
- 00.30 Japan CPI
- 00.45 Feds Bowman speaks
- 07.00 UK retail sales
- 13.30 CAD retail sales
- 15.40 Feds Williams speaks
- 18.00 Feds Bostic speaks
コメント