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Kahn insists ULEZ expansion isn't about raising money

Welcome back after the long weekend. Actually had some decent weather which obviously made it far more enjoyable. Not sure its here to last mind you, but let’s face it summer is over this week and autumn begins, if you are using the meteorological system of course, the alternative is the Met office who see 23 sept as the beginning of autumn. Regardless, summer is on its way out, I’m just hoping it remains mild for a bit longer.


Friday turned out to be an interesting day in the currency markets, Feds Powell spoke at Jackson Hole and sent US dollar racing higher at one stage when he said Feds work on inflation is not finished and although Fed will proceed with caution, further rate rises are possible if appropriate. He stressed that the inflation target remains at 2% and that the economy was not cooling as he’d have expected. This question of raising inflation targets is going to be around for a while I think. It’s a bit cheating really, just changing targets if they become difficult to achieve, but targets do have to be reasonable. I think a major central bank will change from 2% at some point over the next few months.


GBPUSD had traded up to 1.2650 dropped to 1.2550, EURUSD had traded up to 1.0840 but dropped to 1.0765. However the market then worked out that Powell hadn’t really said anything we’d not heard already and both pairs gradually pushed higher again, before settling at current levels of 1.2625 and 1.0825. This 1.2620 area in GBPUSD is actually quite interesting for me, having acted as support through much of August and acting as something of a pivot area now. It remains to be seen whether we can now hold above here. GBPEUR at 1.1660, all pretty stable.


It’s a relatively quiet calendar today but the rest of the week is considerable busier, with german inflation and US GDP tomorrow, EU inflation and US core PCE Thursday and then US nonfarms payrolls Friday. A headline of +170k is currently expected here, although the reality is we’d need to be a long way off that level to change Fed rate expectations next month.


Elsewhere a bit of economic support from China designed to boost equity trading was officially announced over the weekend, which has helped push AUD higher, AUDUSD now 0.6450 and GBPAUD back below 1.9600 at 1.9575, technical traders noting we’ve been a in a declining channel for the past few days with lower highs and lows, if they are right we should expect some support around 1.9550.


A word of warning for anyone driving near London. The ULEZ expansion begins today despite opposition to the scheme and despite many concerned citizens ripping down the cameras as soon aqs they have been put up. Older cars, particularly larger engine cars and diesels are likely to have to pay £12.50 for the privilege of driving in any London borough. Now, I don’t live in a London borough but I do live 3 miles or so from one and many of my journeys naturally take me through a london borough. My diesel BMW is not ULEX compliant so I’m either going to have to find alternative routes, get a new car, or pay up. My mother lives just 5 miles away but she is in a london borough so going to visit her will cost £12.50. I am debating with her as to whether she’s worth it.


Obviously a change of car is required at some point but I’d rather have chosen when to do that than have it dictated to by Sadiq Kahn. He insists this is all about air quality and not raising money, however when we are all driving electric vehicles there is no doubt the rules will change and it will become a fee for any car with tyres, given they are not so great for the environment. There is no way they will put up cameras and not have then bringing in money one way or another.


Rant over, time to get to work, although perhaps my time will be better spent trawling through autotrader to see what I can swap my car for…..


- 15.00 US consumer confidence, JOLTS jobs

- 23.45 NZ building permits

- 02.30 AUS building permits, monthly CPI


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