Good morning
For this week, US data releases will be one hour earlier at 12.30 or 14.00 london time due to the clock changes.
In addition, FX option expiries will be 14.00 london time, not the usual 15.00 london time.
Welcome to November. I have to say I’m pleased to have got October out of the way and I’m looking forward to a less volatile and generally more pleasant month. However with FOMC and BoE this week I might be asking just a bit too much.
USD had been pushing higher yesterday, we saw GBPUSD trade down from a high just above 1.1600 to 1.1460, however a strong performance from Asian markets overnight including a whopping 5% increase in the Hang Seng and China stocks showing gains around 3% seems to have helped risk sentiment push higher and USD lower. As I type GBPUSD is back to a more comfortable 1.1540. Warnings of tax increases and spending cuts to fill a gaping £50bn hole in public finances but I’m hoping much of the bad news is now already out there.
The move higher in China stocks came as something from a surprise, particularly as video footage emerged of Disney Shangahi being shut with visitors locked inside, unable to leave until they had shown a negative Covid test. At least the rides remained open!
RBA raised rates by the expected 25bps last night and did suggest further rate rises are on the table, AUD weakened initially but after some ups and downs it is back to near pre-announcement levels. AUDUSD was 0.6440, traded down to low-64s a couple of times and now back to 0.6445, helped by this USD weakness, GBPAUD moved from 1.7860 to 1.7950, currently in the middle of that range at 1.7905. RBA did raise inflation forecasts and lower growth forecasts, we’ll see more about that on Thursday night when we see their statement on monetary policy.
BoJ minutes will be seen overnight, obviously these will be scoured for any mention of intervention, particularly for what may trigger intervention, what levels they may be watching. Meanwhile we have heard from FinMin Suzuki who has again said they will respond to sharp moves and are talking to other countries regarding FX policy, I still think they are looking for coordinated action. Meanwhile MoFs Kinoshita said the idea of intervention is not necessarily to alter the path of the currency, but to prevent speculators from creating too much volatility. Seems to open the door for some further yen weakness but it is less of a one-way street now we are seeing USD weakness dripping in.
Various PMI releases today but attention of course on FOMC rate announcement tomorrow.
- 09.30 UK S&P manufacturing PMI
- 13.30 CAD S&P manufacturing PMI
- 13.45 US S&P manufacturing PMI
- 14.00 US manufacturing ISM
- 21.00 RBNZ financial stability report
- 22.45 NZ unemployment
- 23.50 BoJ minutes
- 01.30 AUS building permits
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