Good morning
US dollar weakened through the day yesterday and that theme has continued into this morning, with GBPUSD at 1.2435 as I type, EURUSD testing that 1.0920/30 that has held a few times in the past couple of weeks. GBPEUR back up to high 1.13s, not quite breaking 1.1400 yet. Further upside for both EUR and GBP is possible, but depends greatly on overall risk sentiment. As we have seen recently, if sentiment turns sour, USD will push higher.
Plenty of thinking though that ECB have potential to increase rates further than the market currently prices in and as such there is ongoing interest in upside EURUSD trades. For now corporate interest seems happy to sell GBPUSD at these levels, or close to,.
RBA left rates unchanged this morning, AUD weakened on the release with GBPAUD trading from 1.8285 up to 1.8360 initially and then onto 1.8400 this morning. RBA statement did include the line ‘some tightening may well be needed’ which is slightly less hawkish than the previous ‘further tightening will be needed’.
RBNZ rate announcement tonight where a 25bps is expected but I do wonder whether the market will now consider ‘no change’ as a possibility. Its an outside chance, given the expectations for two 25bps rises, one tonight and one next month. AUDNZD now 1.0725, support noted at 1.0675. RBAs Lowe speaks tonight, soon after the RBNZ announcement. If we see decent NZD upside after the RBNZ, I wonder whether Lowe will try to sound a bit more hawkish to give AUD some support.
We are going to have some weird times in the US political arena. Trump seems to have increased his lead in the Republican presidential nominations for 2024, at the same time he faces charges in a New York court today. He is expected to plead not guilty. You’ll know I wasn’t completely against Trumps Presidency first time round, but I don’t think the world needs him in charge of the US for a second term. Enough is enough. I am still amazed though at the lack of decent candidates the US can offer out of the 330 million or so people living there.
Oil prices are stable after the rally yesterday that came as a result of the surprise announcement of OPEC+ production cuts. US have voiced their unhappiness at the cuts but they have little clout these days and their words will fall on deaf ears.
Don’t be fooled by the sunshine this morning, its freezing outside, we’ve had a thick frost. However it should warm up through the day, the rest of the week the weather looks pretty mixed. Make the most of the sunshine while you can.
- 15.00 US factory orders, JOLTS job openings
- 16.30 BoEs Pill speaks
- 17.30 Feds Cook speaks
- 23.00 AUS S&P services PMI
- 02.00 RBNZ rate announcement
- 02.30 RBAs Lowe speaks