Good morning
GBP continues to bounce around in its recent range, GBPUSD having been up to 1.2530 but currently testing the 1.2505 area, while GBP is also at the lower end of recent ranges against EUR with EURGBP 0.8565 (GBPEUR 1.1675). BCC say inflation is likely to hit 10% by Q4 2022. Meanwhile Boris Johnson is speaking today where he is likely to try to drum up support for his leadership. Not going to be easy when nearly half of the party voted against him.
China saw a much larger than expected trade surplus release overnight, up at almost $79bn, some $20bn higher than estimates. A huge rally in exports was the main driver, the lifting of restrictions in Shanghai was probably not a major factor, coming a little too late in May to have much impact, although I do read this morning that some neighbourhoods are facing a new lockdown after a spike in cases. US may be looking to ease some China tariffs but I also read that several large South Korean firms such as Samsung and LG are leaving China as relations continue to decline.
Staying in Asia, I see USDJPY traded up to 134.50 overnight but has slipped back 100 pips to mid-133’s. Most indices in the region were lower, although Japan remained pretty much flat.
Main attention today on the ECB rate announcement. No policy changes are expected today although we look for confirmation that asset purchases will end at end June/early July, plus confirmation that we’ll see a rate rise at next months meeting. I don’t think they will offer many clues as to whether that move will be 25 or 50bps, Lagarde has already suggested two 25bps rises in July and Sept are likely, but perhaps we’ll get an idea of whether zero is a target or whether they will go higher. We may also see ECB raising inflation forecasts, while cutting growth forecasts. That’s never a great combination. EURUSD currently 1.0710, pretty much in the middle of the recent 1.0660 1.0750 range.
- 12.45 ECB rate announcement
- 13.30 ECB press conference
- 13.30 US initial jobless claims
- 16.00 CAD financial system review, BoCs Macklem speaks
- 23.45 NZ electronic card sales
- 00.50 Japan PPI
- 02.30 China CPI
Comentarios