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Missiles land in Poland as NASA shoots rocket to the moon

Good morning

The US dollar weakened on the release of the US PPI data yesterday which had come out weaker than expected. GBPUSD traded above 1.2000 for the first time since August, hitting 1.2025, while EURUSD reached 1.0480. GBP gained on the EUR, reaching 1.1480. This morning UK inflation came out stronger than expected, MoM at 2% and YoY at 11.1% which led to a bit of volatility but GBPUSD now at pre-release levels around 1.1885. GBP has slipped back against EUR after the numbers, GBPEUR now 1.1420.

Just as Russian Foreign Minister Lavrov left the G20 meeting yesterday, Russia launched a huge missile strike on Ukraine, one of the largest seen to date, targeting homes and infrastructure. Missiles hit Poland, killing two people there, which immediately sent the markets into risk-off territory on fears of a possible escalation. Russia strongly denied they had fired the missiles, and accused NATO of engineering the strike to escalate the war. It does now seem possible that the missiles that landed in Poland were fired from Ukraine, perhaps part of air defences to shoot down the Russian missiles. Even Biden has said the missiles were unlikely to have come from Russia and world leaders have expressed the need for calm before we know the full details of the strike.

Sunak was due to meet China President Xi today but that has been cancelled due to a change in schedule after the events in Poland. The Telegraph report that Sunak has been key in a global effort to take a softer stance on China although some of his recent comments have still been quite strong, suggesting China poses a great challenge to our security and values.

Trump has confirmed he will run to be Republican candidate for the 2024 Presidential election. It is not yet clear who Trump will be up against but there does seem to be a reasonable list of potentials including Florida Governor Ron DeSantis, Trumps ex-deputy Mike Pence and Liz Cheney, daughter of former vice-president Dick Cheney.

NASA has successfully launched its Artemis 1 moon mission that takes the US a step closer to sending men to the moon. The launch has been delayed several times this year due to both technical faults and weather conditions but finally the most powerful rocket ever has taken off. This mission in unmanned but eventually the plan is to send people to the surface of the moon for up to 30 days.

US retail sales are out later today and we have several central bank officials speaking, but attention is likely to remain on the situation in Ukraine, Poland and Russia while we wait to hear the true circumstances around the missile strike.

- 09.00 EU financial stability review

- 13.30 US retail sales

- 13.30 CAD CPI

- 14.15 BoE monetary policy report

- 14.50 Feds Williams speaks

- 15.00 ECBs Panetta speaks

- 17.00 ECBs Lagarde speaks

- 23.50 Japan trade balance

- 00.30 AUD unemployment

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