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GBP struggles on retail sales data

Good morning

GBP has struggled a little this morning after retail sales numbers disappointed. GBPUSD had been at 1.3210, but since dropped to 1.3165, while GBP has also lost a little ground against the Euro, with EURGBP moving from 0.8345 (1.1985) to 0.8360 (1.1960). Not exactly significant moves but enough to keep GBPUSD close to the lows over the past couple of days.

ECB seem certain the Ukraine crisis will not push the Eurozone into recession, although Schnabel has said ECB would rethink the end of bond purchases if it were to happen. EURUSD 1.1015 as I type. EU leaders meanwhile are refusing to pay for oil and gas in Roubles as requested by Putin, citing the order as a breach of contract. Does Putin care? I doubt it. Russia even have the audacity to table a bid to host the 2028 Euro championships. Really?

Morgan Stanley are the latest major bank to forecast a 50bps rate rise from the Fed in both May and June, followed by 25bps rises at the remaining meeting this year. They also see further rises in 2023, with a target rate of 3%. UBS points out that despite a war in Ukraine, spiralling energy costs, rising interest rates, slow growth in China, high inflation, the S&P is only 6% off all-time highs. They don’t have all the answers but do highlight that S&P does seem to rally when Feds is tightening and falls when rates peak. I’ve no reason to doubt them but it does go against the general idea that equities struggle when rates are raised.

USDJPY hit 122.40 yesterday but dropped quickly to 121.20. I’m not sure what was responsible for the move, particularly as BoJs Kuroda made it clear he doesn’t have a problem with a weak yen and that it is a positive for Japans economy. I wonder if there is some concern behind the scenes that US won’t look favourably on the Yen weakening future.

EU leaders met yesterday, ending with a joint statement saying they will close sanction loopholes and will add $1b in aid to help the crisis in Ukraine. They look for Russia to be removed from the G20 and say they would respond accordingly if Russia used chemical, biological or nuclear weapons. It seems US will supply Europe with gas and Canada will increase oil production to help remove Europes reliance on Russia but these are not overnight fixes.

The clocks change this weekend which means we lose an hours sleep. For some reason the one hour clock changes messes me up for a whole week, always has and I’ve never quite worked out why. Still, it will be lighter in the evenings which means I will soon be looking for midweek matches for my U15s in an attempt to get all our league matches played. Before then we have a massive match this weekend against our main local rivals, many of my players go to school with the opposition players, so for them its all about bragging rights on Monday. For me, well I am already a little nervous, partly for the team as I know how much it means to them, but there is also a little personal pride at stake. I’ll do my best to put on my ‘wasn't that great match’ face, regardless.

Have a great weekend.

- 09.00 German IFO

- 14.00 US pending home sales, Michigan sentiment survey

- 14.00 Feds Williams speaks

- 16.00 Feds Waller speaks

- 16.45 BoCs Gravelle speaks

- 19.30 CFTC position data

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