Good morning
A lack of any important economic data yesterday meant we had, yet again, a pretty calm day in the currency markets. Once again, ranges in the majors were pretty tight, the exception was JPY which traded from 148.50 to 149.30 through the afternoon, within ten pips or so of the highest levels since the beginning of August. The weaker Yen helped drag GBPJPY up to 195.15 despite GBPUSD hanging around the 1.3070 area.
EUR was under a small bit of pressure, nothing significant but enough to see EURUSD down to 1.0945 and GBPEUR up to 1.1945. Expectations of a November rate cut perhaps to blame.
As I type, we are at similar to levels to where I left them yesterday evening. GBPUSD at 1.3075, EURUSD 1.0935, USDJPY 149.15. GBPEUR grinding higher to 1.1955, GBPJPY at 195.00. I’m watching CAD with some interest, it has weakened steadily through the week, GBPCAD up to 1.7945 from a low around 1.7750, similarly USDCAD has moved up from 1.3570 to 1.3725. Suggestions BoC will cut rates 50bps at their meeting later this month weighing on CAD, further weakening more than possible.
Netanyahu did speak to Biden yesterday but as at the time of writing no details of the conversation have been revealed. There are some reports suggesting US are unhappy with Israel’s refusal to share details of any plans they may have. Israel have said that any attack would be fatal, accurate and surprising. Iran has since made it clear it does not want a war but will hit back with thousands of missiles if attacked.
Florida hurricane Milton made landfall in Florida, brining high winds, rain and even tornados. It is expected to cause widespread damage. Millions of residents were told to evacuate although not all had done so. Reports suggest the hurricane has since been downgraded which, despite still being devastating, hopefully means less of an overall disaster. We’ll know more as the day goes on.
Speaking of hurricanes, I’m not sure what is wrong with the BBC weather pages but they are reporting hurricane force winds in the UK over the next couple of days. Clearly a mistake but its taking them a long time to correct it.
Cleverly was knocked out of the Tory party leadership contest, something of a surprise given he was ahead in the third round ballot on Tuesday. His departure leaves Badenoch and Jenrick in the battle to replace Sunak, the result will be known on 2 Nov.
FOMC minutes yesterday showed the 50bps cut at the last minute was a very finely balanced decision, with some officials preferring a smaller 25bps cut. In the end only Bowman dissented but others were close to doing so, in the end the risks to the labour market won over. It does however make another 50bps cut less likely.
US CPI inflation numbers today are likely to be the highlight of the week. The market is looking for a headline of 2.3%, down from 2.5%, while the core is expected to be unchanged at 3.2%. Usual rules apply, a stronger reading should send USD higher, a softer than expected number should see USD back off a little. We have a couple of Fed officials speaking after the announcement, worth checking just to see if they make any comment on rates.
We’ll have the latest monthly UK GDP number early tomorrow morning, not the most important release, the quarterly numbers are the bigger deal, but there is hope we’ll get a number just above zero this time. US PPI inflation is out tomorrow afternoon, not quite as key as the CPI but has been known to move markets.
I’ve not really paid much attention to cricket recently, I did see England were playing a test match against Pakistan but lost a bit of interest when I saw Pakistan scored a decent 556 in their first innings and presumed England would struggle thereafter. How wrong I was! England are currently 658-3. Joe Root is on 259 and his partner Brook is on 218. During Root’s innings he surpassed Alastair Cook to become Englands all-time Test run scorer. An incredible achievement.
Have a great day
- 12.30 ECB minutes
- 13.30 US CPI, initial jobless claims
- 14.15 Feds Cook speaks
- 16.00 Feds Williams speaks
- 19.00 US monthly budget statement
- 22.30 NZ business PMI
- 07.00 German HICP
- 07.00 UK GDP, industrial production
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