Incredible scenes at US baseball match....
Well after a busy few days data-wise, the calendar looks pretty light today other than some Fed officials speaking, just in time for me to be back in the office having spent a few days visiting existing, and hopefully some new, clients. It is quite interesting that as I sit here now it looks as though not a lot has happened over the past couple of days. GBPUSD is at 1.3710, just 30 pips higher than my previous report on Tuesday, GBP also stronger by a similar amount against EUR with EURGBP now at 0.8560 (GBPEUR 1.1680), and EURUSD just 10 pips higher than it was at 1.1740.
Of course, this doesn’t tell the full story, we have seen a bit more volatility and wider ranges, GBPUSD for example having been down to 1.3610 and up to 1.3750, but as of now its almost as though I’ve not been away. It is still far too easy to get complacent though.
Equity markets made a reasonable job of recovering with Nikkei up over 2% overnight, although Hang Seng was lower again on the ongoing Evergrande concerns. It is still far too easy to get complacent though. The better risk sentiment comes despite a host of potential issues such as fears over rising gas prices heading into winter, petrol station supplies being cut, some supermarket shelves being empty, possible interest rate rises. A lack of lorry drivers still seems to be one of the biggest problems. OK, these are predominantly domestic issues so lets see if FTSE can follow most Asian equities with a shift higher.
BoE were on the hawkish side yesterday, seeing inflation well above 4% in the last quarter of this year, leading two members to vote for a reduction in asset purchases although the seven other voters still see inflation rises as transitory and therefore happy to keep current policy unchanged. Despite this, markets are pricing in earlier rate rises, a rise to 25bps in Feb and then to 0.5% by August is the current market thinking, still ahead of BoEs own projections.
Norway did become the first G10 central bank to raise rates with a 25 bps rise, a move widely expected. Turkey on the other hand surprised the markets with a rate cut of 1% taking the rate to a still staggering 18%. USDTRY spiked higher, now around 8.85 while EURTRY is just short of 10.40.
German election this weekend, Merkels CDU party has been heading back up in the polls but still sits behind rivals SPD.
As we head into the weekend I am looking forward to Sundays match for my young team, hopefully we can continue our winning streak. I’ll report back on Monday. We do also have Spurs v Arsenal to ‘enjoy’. I think supporters of both clubs are pretty pessimistic about their chances so this could be all about who plays slightly less bad than the other team. My money is on Arsenal coming out on top, I’ve been a Spurs fan long enough to know we should never get too optimistic. I’m not planning on reporting the result of this on Monday!
Finally, on the subject of sport, I have heard a great piece of commentary from a Baseball commentator, getting so incredibly excited that a fielder managed to catch a ball with his ungloved hand. ‘He caught it with his bare hand, you’ve got to be kidding me!’ was the quote. It is being treated as a once in a lifetime event. They obviously don’t watch much cricket over there. I won’t put a link on here as doing so tends to send my emails into ‘junk’, but when you get a spare moment, look up ‘Jesus Sanchez catch’ and hopefully you’ll find it.
- 09.00 German IFO
- 13.45 Feds Mester speaks
- 15.00 US new home sales
- 15.00 Feds Powell speaks
- 17.00 Feds Bostic speaks
- 20.30 US CFTC position data