Good morning
USD continues to show signs of weakness as it has done for much of the week already, albeit gradually. This time it was slightly worse initial jobless claims and challenger job cuts data yesterday afternoon that helped the USD lower. GBPUSD reached a high of 1.2770 this morning, the highest since 12th Nov, and EURUSD touched just a few pips short of 1.0600 pretty much matching the high since 20th Nov.
This USD weakness comes ahead of the long-awaited US nonfarms today. We’re looking for a headline well up from last month’s weather-affected +12k, something in the region of +200k, but there is a chance the unemployment rate will tick up to 4.2%. A slightly lower average hourly earnings figure is also expected, if any of these elements do come in on the softer side I’m sure we’ll see increased calls for a 50bps FOMC cut in a couple of weeks.
GBOP has made gains against USD this week and also holds up well against EUR, GBPEUR now 1.2065, not a huge surprise given the French turmoil. However I see the CBI has lowered UK growth forecasts for 2024 and 2025 to 0.9% and 1.6%, from 1% and 1.9%, citing measures in Reeves budget that will squeeze business.
Macron addressed the French nation yesterday evening after the collapse of the French government after the confidence vote which Macron called ‘unprecedented’, the first time a French government has been voted down for some sixty years. He thanked Barnier for his three months of service and vowed to find a new PM in the coming days. He has blamed far right and far left collaboration for the government downfall. I wonder If Macron is ruing his decision to hold a snap election.
RBI did keep rates on hold earlier this morning in a 4-2 vote, confirming that the move to neutral rates does not mean immediate rate cuts. RBI have to deal with a difficult combination of lower growth and rising inflation, for now looking for to the latter. RBI did surprise with a 50bps cut to the reserve cash ratio to 4%. Overall, after a bit of volatility, USDINR settled around 84.65, with GBPINR up just above 108 now.
In Korea, reports of another attempt at imposing martial law sent USDKRW up from 1,415 to 1,429 but the move was short-lived as Korean military leaders played down those suggestions. Still talk that President Yoon will face an impeachment vote tomorrow.
Meanwhile commodity currencies such as AUD, NZD and CAD have all lost ground against GBP, now 1.9855, 2.1800 and 1.7910 respectively, with AUD and NZD now both around the highs seen back in October.
Yesterday evening Spurs disappointed once again with a loss to Bournemouth which sees Spurs slip to mid-table after only two wins in their last six league matches. Worrying, particularly as we’ve got high-flying and in-form Chelsea on Sunday. That could be the highlight of the weekend fixtures although Man Utd v Notts Forest will be intriguing, both looking to bounce back from recent defeats.
In cricket, England looked they had performed badly with a first innings of 280 all-out, although it wasn;t a bad comeback from 43/4 at one stage. New Zealand were a sorry 86/5 at the close, England will be looking to turn the screws over the weekend.
Once we have nonfarms out of the way, and hear from a few more Fed officials, we can look forward to the weekend but we are far from being able to settle into the Christmas spirit just yet. Next week brings rate announcement from ECB, RBA, BoC and SNB. We also have inflation data from US and Germany, and Aussie employment numbers. The following week isn’t much better, with BoE and FOMC rate meetings. No rest for the ‘wicked’.
Have a great day, and a great weekend as and when it comes.
- 10.00 EU GDP, employment change
- 13.30 US nonfarm payrolls
- 13.30 CAD unemployment
- 14.15 Feds Bowman speaks
- 15.00 US Michigan sentiment survey
- 15.30 Feds Goolsbee speaks
- 17.00 Feds Hammack speaks
- 18.00 Feds Daly speaks
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