• richard evans

ISS offers more interest than ECB

Good morning

I sat out on the garden in the evening and as it turned dark a bright light passed overhead. A look on an App told me it was the International Space Station, some 250 miles above us. Quite remarkable. A bit of time later, the same light went over, sure enough it was the same space station. We had sat there long enough for it to orbit the earth. Travelling at over 17,00mph, it takes just 92 minutes to orbit the earth. I don’t know why this surprised me but I assumed a full orbit would take considerably longer. Must be quite incredible looking down on earth from up there. I’d love the chance to be up there, maybe I’ll have to start saving to join the likes of Branson and Bezos.

US equities were a little mixed yesterday, no real surprise given the moves we have seen through the week. Futures prices show a little higher this morning so perhaps we can end the week on a positive footing.

ECB were dovish as generally expected. Rates and asset purchases remain on hold but ECB did adjust their forward guidance after the recent monetary policy review. Overall ECB look set to keep rates low, perhaps even lower, for longer, certainly until inflation is well established above 2%. Given the market was already pricing no rate rise until into 2024, this may not be a huge surprise but some do see the change as quite a significant shift and marks the ECB as one of the more dovish central banks. Interesting that Weidmann was against the new guidance and several more had voiced some objections over lack of clarity, but not enough to stop Lagarde. EURUSD actually traded up to 1.1830 yesterday afternoon but was sold off to 1.1755, currently 1.1770.

GBP held onto most of its previous gains against USD, 1.3780 seems to be capping the upside for now, reasonable retail sales numbers out this morning have failed to give GBP the boost needed to break higher and instead GBPUSD slips back to 1.3740. GBP has fared better against the Euro, with EURGBP trading to around 0.8540 (GBPEUR 1.1710) at one stage, now at 0.8560 (1.1680).

Covid remains a key driver and GBP seems to be acting as a pretty good indicator of risk sentiment. We saw GBP lower earlier in the week due to Covid infection rate concerns, particularly the rapid spread of the Delta variant to become the dominant strain. For now we have seen some recovery but it feels rather fragile.

EU, UK and US PMIs out through the day, have been known to move markets so don’t put your feet up just yet. Do have a terrific weekend although watch out for the odd thunderstorms that are forecast to be with us for Saturday and Sunday. I bet those storms look pretty spectacular from up on the International Space Station.

- 09.00 EU markit manufacturing, services PMI

- 09.30 UK markit manufacturing, services PMI

- 13.30 CAD retail sales

- 14.45 US markit manufacturing, services PMI

- 20.30 CFTC position data


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