Good morning
US data releases will be one hour earlier at 12.30 or 14.00 london time due to the US clock changes that took place recently.
In addition, FX option expiries will be 14.00 london time, not the usual 15.00 london time.
This will be until Sunday 31st when we change our clocks in the UK.
I had said yesterday that while BoE were highly expected to keep rates unchanged, it was worth watching the voting patterns. The results were quite surprising, not one member voted for a rate rise this time. One looked for a rate cut, the remainder all voted to leave rates on hold. This was taken as a dovish sign by the markets, and this feeling was added to by Bailey when he said the BoE does not need to wait until inflation hits 2% to start cutting rates, and pointed towards a rate cut in June.
GBP was sold off as you’d expect, GBPUSD traded down to 1.2650 having been up to 1.2800 in the morning, GBPEUR also fell, reaching 1.1655, the lowest level we’ve seen for two months. By the evening GBP had also fallen in other crosses, with GBPAUD down to 1.9270 and GBPJPY to 192.00. UK retail sales this morning were actually not as bad as had been expected but this hasn’t prevented further losses for GBP, which has seen a low so far this morning of 1.2590 against USD and 1.1640 vs EUR, while GBPJPY is now around 190.50.
AUD hasn’t performed well, highlighted by GBPAUD now being up at 1.9325 despite the ongoing GBP weakness. AUD seems to be suffering from a bit of contagion of weakness in both China equity markets and CNY overnight , which has seen USDCNY jump from 7.2000 to 7.2300.
BoE dovishness aside, we had a couple of surprise rate announcements yesterday. SNB cut rates 25bps to 1.5% as I was typing up yesterday’s report, and then Turkey came in with a whopping 5% rise to take their rates to 50%. EURTRY fell from around 35.60 to near 34.60 before settling at 34.80.
USDJPY is holding above 151.00, now 151.30 having traded up to 151.80 overnight. A lot of talk from Japanese officials about the level of Yen, they are watching closely and all that. There does however seem to be more concern over possible intervention, there is some talk that they’ll get more vocal around the 152.00 area
Elsewhere, gold had hit new highs around $2,222/oz on Wednesday night but fell back to $2170 yesterday, and as I type it is $2165. $2145 looks like a key area of support for the time being.
In sport, Wales beat Finland to set up a play-off against Poland on Tuesday for Euro 2024 qualification. England are current favourites for the tournament, we certainly have a lot of talented players, but we’ve been disappointed on so many occasions I find it difficult to be confident. England take on Brazil tomorrow evening in a friendly, which should be a decent match but is being a bit overshadowed by criticism of Nike’s rather too colourful interpretation of the St Georges flag on the England shirts.
On the subject of football, not sure if you’ve seen the Harry Kane statue commissioned by Waltham Forest Council, but its worth a look. Not quite on a par with the utterly ridiculous Cristiano Ronaldo one from a few years back, but I’m not sure it looks much like the ex-Spurs striker. Its been sitting in storage for a few years after the council couldn’t work out where to put the statue. Well, that’s what they say. I think they have just been trying to hide it away hoping no one will see it.
Otherwise the early birds can catch the Aussie F1 race in the early hours of Sunday morning. Think I’ll wait for the highlights, which probably won’t last long enough. Verstappen is of course odds on favourite to win again.
Weather doesn’t look so great but I think there will be time to get out and cut the grass again. Really want to put a bit of weed and feed on as well but I seem to remember doing that a couple of years ago and although the weeds did in fact die off, the grass grew absurdly quickly for quite a while, which is really the last thing I need. Still, shouldn’t complain, things could always be worse. Tomorrow marks the fourth anniversary of the announcement by UK PM Johnson of the first Covid lockdown which ordered the vast majority of people to stay at home.
A quieter day today perhaps, not much in the way of economic data today but plenty of central bank speakers on the calendar, and given the central banks are driving the markets at the moment we can’t ignore what they have to say. Feds Powell this afternoon possibly the highlight of the day
Have a great weekend
- 09.00 ECBs Nagel speaks
- 09.00 German IFO
- 12.30 CAD retail sales
- 13.00 ECBs Nagel speaks
- 13.00 Feds Powell speaks
- 16.00 Feds Barr speaks
- 17.00 ECBs Lane speaks
- 20.00 Feds Bostic speaks