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  • richard evans

GBP under pressure across the board

Good morning

A quick look at GBPUSD and EURUSD sees them at 1.2145 and 1.0655 respectively, once again pretty close to levels at this time yesterday. We did see both a little lower after London close yesterday, EURUSD dipped back just below 1.0600 while GBP suffered more, reaching 1.2055, just a few points off the early December low. GBP is lower in the crosses as well, GBPEUR just below 1.1400, GBPAUD 1.7960 and GBPJPY 160.00. General USD weakness has seen most major currencies off those lows against the US dollar this morning.

ECBs Centeno has said more interest rate rises are inevitable, wh’le German FinMin Lindner says inflation remains a serious risk. A rare moment of hilarity from the German as he said the economy will recover quicker than the German football team.

USDCAD has traded down below 1.3600, currently 1.3585, while GBPCAD is 1.6470 as headline Canadian YoY CPI came out just a little higher than expected at 6.8%.

Ukraines Zelensky visited US yesterday while Russia talked of increasing the size of their armed forces and increasing the age range for military service. Putin insists the Ukraine war is not Russia’s fault. I’d love to sit down with him and hear his ideas as to why. Even Russia’s semi-ally China is calling for peace talks and seems to be distancing itself from Russia.

Some reports from WHO suggest China hospitals are filling up quickly as a Covid wave takes hold after the recent easing of restrictions. China are playing the numbers down but it is feared the reality is far worse than they are letting on. Chinas vaccines have been shown to be less effective than Western vaccines, yesterday the German government announced it had sent the first batch of Pfizer vaccines to China. Not sure how well publicised that will be in China, the idea that China need to rely on Western help. I presume the vaccine will be branded as something suitably Chinese.

Turkey interest rate announcement today. I must say I don’t really follow TRY too much but I am interested to see if CBRT cut rates 1.5% to 9% as expected. President Erdogan is clear that he believes brining rates lower will help ease inflation. With inflation in Turkey up near 85% it will be very interesting to see whether Erdogans plan will work, at a time when many other central banks are following the more traditional process of raising rates to ease inflation. USDTRY up at 18.67, EURTRY 19.85.

US data today includes GDP, while BoJ minutes due tonight could give more information on their decision to widen the YCC earlier this week that shocked the markets and sent JPY higher.

Otheriwse I’ll be spending the day avoiding my wife as best as I can. With days to go until Christmas I have come down with something rather unpleasant. I’m hoping it will come and go quickly enough but we have several large gatherings scheduled here that Tara will be cooking for. If she goes down with something then the responsibility to feed the masses will fall on my shoulders. Believe me, no one wants that. In Japan it is traditional for people to enjoy a KFC on Christmas day (really, look it up). My family might be turning Japanese…….

- 11.00 CBRT rate announcement

- 13.30 US GDP, core PCR, initial jobless claims

- 23.30 Japan CPI

- 23.50 BoJ minutes


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