Good morning
Not a great deal of movement in the currency markets. GBPUSD is 1.2715, EURUSD 1.0900, USDJPY 114.65. GBPJPY just a touch below 184.00 and GNPEUR a ferw points higher than yesterday at 1.1665. All very similar levels to yesterday.
US markets reopen today after their 4th July celebrations. A limited calendar today is unlikely to set the markets alight although FOMC minutes later could give us an idea of whether the pause at the June meeting will be continued or whether Fed resume rate rises. Powell did sound pretty certain we’d see a couple more rate rises but we will hopefully get some insight into the thinking behind the pause. US nonfarm payrolls are out this Friday, while 26th July is the next US rate announcement.
Reuters have reported that the weather phenomenon El Nino could hit hard this year, particularly in the Southern hemisphere. The damage this can inflict on crops and also infrastructure does tends to be inflationary which could keep pressure on central banks to raise rates.
China Caixin PMI came in lower than expected overnight which sent USDCNY higher although the official came in at 7.1968, the lowest fix for a week or so. Headlines seem to revolve around trade with China, more specifically restrictions on trade with China. US are limiting the supply of microchips, China are not exporting the rare earth metals used in chip production and have warned further export controls could be introduced on other materials such as Lithium. China have also cancelled a trip by EU’s Joseph Borrell that had been planned for next week, no reasons given but the export controls on Dutch semiconductor products is likely to be a factor.
Turkish inflation numbers were released this morning, coming in at a whopping 38%, around 1.5% lower than expected but it’s still a frighteningly high number.
I was up in London yesterday afternoon and was pleased to see the city busy and bustling with people, despite the heavy rain that fell while I was sat in a bar. Quite a change from this time two years ago, when my wife was taken into hospital with Covid, fortunately she recovered and came home a week or two later but for a while it really looked as though it might not have been such a happy ending.
Teachers are on strike today as they look for more money. I mentioned yesterday the risk of wage rises on inflation, I’m still not sure of the impact on inflation of a wage increase for public sector workers but I’d have thought it was pretty significant. Well, its not going to help bring inflation down, that’s for sure. Anyway I now have no kids at school so the strikes themselves don’t directly affect me, but I still feel aggrieved. Must focus more on those water companies…..
- 09.00 EU HCOB composite PMI
- 09.30 UK S&P services PMI
- 10.00 EU PPI
- 15.00 US factory orders
- 19.00 FOMC minutes
- 21.00 Feds Williams speaks
- 02.30 AUS trade balance
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