Good morning
USD pushed higher through the day yesterday, GBPUSD reached 1.3250 after the London close, while EURUSD slipped to 1.1050. Initially the move looked like it was triggered by better than expected JOLTS jobs data, even though the ISM PMIs out at the same time disappointed compared to expectations.
However much of the move is down to the news that Iran had launched missiles towards Israel, in response to Israeli offensives in Lebanon. Safe haven USD buying was noted, as was some Yen buying which took GBPJPY down towards 190.00, having been up above 193.00 earlier in the morning. The risk that Israel may look to hit targets in Iran is clear, indeed therre is a risk that further escalation could see the West drawn into a conflict with Iran.
CHF was also bought as news of the attack broke, EURCHF which had been up near 0.9500 last week traded as low as 0.9335 prompting SNBs new chair Schlegel to warn of further possible rate cuts by SNB, and potential for currency intervention should CHF appreciate too far. GBPCHF currently 1.1240, down from last weeks highs around 1.1370.
This morning things have calmed a little, the missile barrage was largely intercepted although many did get through but some did get through. For the time being it would seem that Iranian action has ceased. The key now is whether Israel retaliates with direct attacks on Iran or continues its offensive against Hezbollah, Hamas and Houthis. The relative calm has seen GBPUSD push back up to almost 1.3300, EURUSD 1.1070 which puts GBPEUR 1.2010. GBPJPY is well off the lows at 191.55.
Today’s calendar includes a bundle of central bank officials, not sure what they can add that we don’t already know although perhaps the various ECB officials could give some pointers as to whether we’ll see a cut this month. We are gradually seeing more calls for a 25bps at their meeting later this month. We do have the US ADP employment chance, still watched for clues as to what the nonfarms may look like, although I still think it is an unreliable indicator.
Congratulations to Arsenal and Man City for last nights wins in their Champions League matches. Aston Villa and Liverpool are in action this evening, remember though that the big competition of course is the Europa League tomorrow evening, with Spurs taking on the mighty Ferencvaros from Hungary.
Have a great day
- 09.15 ECBs de Guindos speaks
- 10.00 EU unemployment
- 10.30 ECBs Lane speaks
- 12.00 ECBs Elderson speaks
- 13.15 US ADP employment
- 14.00 SNB economic bulletin
- 14.00 Feds Hammack speaks
- 15.05 Feds Musalem speaks
- 16.00 Feds Bowman speaks
- 17.15 Feds Barkin speaks
- 17.45 ECBs Schnabel speaks
- 02.30 AUS trade balance
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