Good morning
Mid-August, can you believe it. And can you believe that I’ve got another holiday coming up next week. Mark certainly can’t, but he has kindly allowed me an extra couple of weeks off to spend touring Europe with my close friend and his dear wife. I went to school with him, he moved off to New Zealand in his early twenties and never really looked back. They are coming over this way and a few of us are meeting up and travelling around various cities including Dubrovnik, Rome, Venice and Barcelona, with a bit of Tuscany thrown in the middle for good measure.
Anyway I got a bit ahead of myself there, I do still have a couple of days before I go but am out for most of today in client meetings so my holiday feels closer than it really is.
Anyway, to the markets. US inflation was bang in line with expectations yesterday which meant market moves were limited, GBPUSD did tick up to 1.2860 although EURUSD was more impacted, the pair rising to 2024 highs around 1.1050. Although both are off those highs right now, attention is clearly turning to the Fed’s rate announcement in September and a rate cut looks more and more likely.
We’ve had both Bostic and Goolsbee talk of the Fed’s dual mandate, ie with inflation under some control attention turns to employment and both see risks of keeping rates too restrictive. Question is whether Fed act before the November election and if so do they go with 25bps or push for a larger 50bps. Much depends on incoming data, particularly the next nonfarm payrolls report due on 6th Sept. Main question for me is whether a 50bps move would seem a bit panicky. RBNZ mulled over a 50bps cut recently but preferred to go with the smaller cut to offer a sense of calm. Sensible stuff.
UK GDP this morning was bang in line with expectations, June coming in at 0% leaving Q2 at 0.6%. Industrial production data beat expectations but market impact has been .limited, GBPUSD currently 1.2845 as I type. GBPEUR now 1.1665 having been as low as 1.1640 yesterday afternoon.
Overnight we had the latest Aussie employment data. The headlines looked good, employment rising over 58k with over 60k in full time employment, part time lost 2k. An uptick in the unemployment rate to 4.2% meant the overall result was not quite as upbeat. AUDNZD rallied from 1.0925 to 1.1040 but GBPAUD holds around 1.9400 and AUDUSD is at 0.6620 having seen a range overnight of 0.6645 to 0.6570.
US retail sales likely to be the main event today, although there is a host of other US data out at the same time including the initial jobless claims which, with Fed starting to focus more on employment, means this could get more attention than usual. We’ll have the UK’s retail sales numbers out early tomorrow morning, markets expecting a bit of bounce back from last months pretty dire numbers.
In other news, I see a rather alarming headline from WHO who have declared a global health emergency over the highly contagious mpox, or monkey pox as it used to be known, which has seen cases spread from DR Congo to several other African countries. The hope is that the declaration of the mpox outbreak as an emergency will trigger more research, understanding and controls.
That all from me. It is A level results day, good luck to anyone you know expecting their results and go easy on teenagers who may look even more gloomy than normal. Go easy on Mark as well, who may also look more gloomy than normal after Leeds were dumped out of the EFL cup by Middlesbrough last night. ‘Concentrating on the league’, I’m sure!
Have a great day
- 13.30 US retail sales, philly fed survey, NY empire state manufacturing, initial jobless claims
- 14.10 Feds Musalem speaks
- 14.15 US industrial production
- 18.10 Feds Harker speaks
- 22.30 NZ business PMI
- 23.45 NZ PPI
- 00.30 RBAs Bullock speaks
- 01.00 RBNZ Gov Orr speaks
- 07.00 UK retail sales
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