Good morning
GBP was reasonably stable yesterday, GBPUSD traded in a 50 pip range between 1.2640 and 1.2690 for much of the day while GBPEUR had a brief 30 pip dip in the afternoon but recovered to the 1.2060. GBPUSD had traded towards the top of that range this morning but has been dragged back down to the 1.2635 area as I type, while EUR is still struggling to shrug off both the French political situation and some weaker than hoped PMIs this morning, pulling EURUSD down to 1.0485. ECBs Nagel has said he expects 2025 to be another year of low growth for Germany. GBPEUR currently 1.2055 having tested up to 1.2080 this morning.
US JOLTS jobs data yesterday was a touch on the firmer side which gave USD a bit of support in the afternoon, todays brings ADP which some say gives an indication of nonfarms although in my mind it is generally an unreliable indicator. Feds officials speaking yesterday erred on the dovish side, with Goolsbee saying that rates should drop a fair amount, and Kugler saying neutral rates are around 3%. Daly was a little less dovish, saying a Dec rate cut is not out of the question but that jobs, growth and inflation are all in a good place. She is not in a rush to cut rates.
USDJPY climbed almost 200 pips from its lows yesterday of 148.65 to 150.55, now 150.35. The recent talk of a Dec rate rise has been diluted after news reports of BoJ concerns about a political response to such a move. GBPJPY traded up to 191.00, now 190.40.
Aussie GDP disappointed overnight, sending AUD running for cover, GBPAUD bounced from 1.9540 to 1.9740 and after a brief retracement to 1.9685 it has headed back up to those highs. AUDUSD is at four month lows, now 0.6430 while AUDNZD trades back towards support at 1.0980. Markets are already adjusting their RBA rate forecasts, now pricing in a cut in April.
A trade war between US and China is looming, with China retaliating over US chip controls by announcing export controls of its own on certain minerals that are used by the US in weapon production. The US are not happy. Meanwhile China have announced that US chips are no longer safe and firms should use locally produced chips instead.
Odd goings-on in Korea, where President Yoon surprised by declaring emergency martial law to rid the government opposition of North Korean elements that he says are acting to destabilise the country. The martial law was voted down and revoked quickly, the opposition suggesting that Yoon is acting to serve only his own political interests and has nothing to do with North Korea. Yoon is excepted to face impeachment today. Korean markets all over the place as you’d imagine, KOSPI fell sharply, recovered, and is now back near its lows, while USDKRW traded up to 1,429 having ended last week around 1,395, now 1,414.
Meanwhile in Georgia, pro-EU demonstrations continue after the ruling party last week announced it was halting the country’s bid to start talks on joining the EU. Plenty of talk of police brutality, with riot police using water cannon and tear gas. Of course, the main talk is of Russian influence in the decision as Georgia seems to be fighting for a future based on Western or Russia values.
All in all a pretty gloomy outlook. I’ll try to cheer things up tomorrow.
Have a great day
- 09.00 EU composite PMIs
- 10.00 EU PPI
- 13.15 US ADP employment change
- 13.30 ECBs Lagarde, Cipollone speak
- 13.45 Feds Musalem speaks
- 14.45 US S&P composite PMI
- 15.00 US services ISM
- 15.30 ECBs Lagarde speaks
- 17.10 ECBs Nagel speaks
- 18.45 Feds Powell speaks
- 19.00 Feds beige book
- 23.00 Feds Daly speaks
- 00.30 AUS trade balance
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