Good morning
A brief bout of USD buying took GBPUSD and EURUSD lower into yesterdays London close, reaching 1.2560 and 1.0400 respectively but overnight both pairs have crept higher again, now 1.2605 and 1.0435. GBPEUR has been pretty unmoved, trading pretty much a 1.2065-1.2080 range for the past day or so and remains within that range at 1.2075.
We’ve seen some decent Yen buying which took USDJPY just below 150.00 around the London open, now 150.25 which outs GBPJPY below 190 at 189.40. The move is put down to some hawkish BoJ talk plus headlines overnight suggesting a US/China trade deal could be possible, which sent the Chinese Yuan a touch higher and USD generally lower.
Attention is growing on the German elections which take place this weekend after the collapse of the coalition government late last year. The right wing parties are expected to make gains this time, focus is very much on immigration, although other parties are saying they would refuse to make a coalition with AfD should the opportunity arise. For now, Merz’s CDU party is leading in the polls but will most likely need to create a coalition with another party and has ruled out AfD as a possible partner.
Plenty of Fed officials speaking again today, they will likely echo comments made recently that while inflation is falling it is still too high and the Fed is in no rush whatsoever to cut rates. Indeed, the Fed minutes from the last meeting showed a cautious approach and we’ll likely need to see further progress on US inflation numbers before rates are cut again. Remember last weeks US CPI data was higher than expected which makes Fed rates cuts less and less likely.
Trump has continued his backlash against Ukraine and more specifically Zelensky, who he has called a dictator and has accused of corruption after seeking to keep the ‘gravy-train’ of foreign aid running. A very noticeable change, perhaps brought on by Zelensky’s rejection of Trumps idea that US will have unending access to Ukraine’s mineral supplies.
We have a pretty long calendar today but its mostly made up of central bank officials speaking. Japan CPI overnight will be interesting given the Yen move, while early tomorrow morning we’ll have the latest UK retail sales figures. I tend to be pessimistic when it comes to retail sales numbers and have little reason to change that view this time around. We’ll see this time tomorrow whether I am right.
Have a great day
- 13.30 US Philly Fed survey, initial jobless claims
- 14.35 Feds Goolsbee speaks
- 15.00 EU consumer confidence
- 16.00 ECBs Nagel speaks
- 17.05 Feds Musalem speaks
- 19.30 Feds Barr speaks
- 21.45 NZ trade balance
- 22.00 Feds Kugler speaks
- 23.30 RBAs Bullock speaks
- 23.50 Japan CPI
- 00.01 UK GfK consumer confidence
- 07.00 UK retail sales
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