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  • richard evans

Markets looks for more aggressive tightening by Fed

Good morning

The US dollar is having another push higher as the market continues to look at aggressive US rate rises, both Feds Evans and Bostic have said they favour a move to neutral on rates while Bullard has suggested Fed is behind the curve and may need to push rates to 3% this year. EURUSD is down to 1.0850, GBPUSD to 1.3030. EURGBP holds around 0.8335 (GBPEUR 1.2000). The decline in the Euro comes despite some hawkish ECB minutes yesterday, together with recent comments from ECB officials talking about the upside risks to inflation and possible rate rises. The Ukraine crisis and perhaps the French elections are weighing on the single currency.

Russia seems to accept their invasion didn’t go to plan as a Kremlin spokesman said the significant loss of troops was a huge tragedy. Russian troops are reported to have left northern Ukraine into Belarus, with the suggestion they will be redeployed in the East.

China are still battling with their zero Covid policy, seeing increases in cases despite lockdowns. Talk that e could see further lockdowns, but surely at some point China must accept this is a battle they cannot win. I do wonder whether their reluctance is in part to do with their vaccine not being as effective as some of the US or European varieties. I seem to recall reading about this a while back although it may well have been tweaked since then.

We have an extremely light calendar today although we do have a few ECB officials speaking, if I’m not mistaken they are probably more on the dovish side. Decent CAD employment numbers this afternoon could support a rate rise of 50bps by Boc next week. USDCAD 1.2595 as I type.

Worth noting that early Monday morning we will have some decent UK data out. That starts a busy week, with UK unemployment, German and US inflation Tuesday, NZ and BoC rate announcements, plus UK inflation Wednesday, ECB rate announcement and US retail sales Thursday. A bit of rest later next week perhaps as we look forward to a long weekend for Easter.

Before then there is plenty going on. This weekend we celebrate my eldest 18th birthday. Where did that time go? Before then my U15s are playing aq double header, that is two matches against the same team on one day, in an effort to ensure we get in as many league matches as we can before the season ends. We have played just six so far and have fourteen still to play. We are in with a good chance of winning the league, so we need to get these matches played. Six points on Sunday would be a good start!

- 12.15 ECBs Panetta speaks

- 12.30 ECBs Stournaras, Makhlouf, Herodotou speak

- 13.30 CAD employment

- 15.00 US wholesale inventories

- 20.30 CFTC position data

- Monday

- 02.30 China CPI

- 07.00 UK GDP, trade balance, industrial production

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