Optimism over a peace deal with Iran drives markets

Good morning

Apologies to those readers who did not receive yesterday’s daily, the internet police stopped my email from sending due to an unspecified word combination that a computer didn’t like somewhere.  I’ve been through it and still can’t see what the problem could be.  Here’s hoping it was just a glitch and this report reaches you.

To be fair, there wasn’t much content in yesterday’s report given the lack of meaningful news, the main event being Aston Villa winning the Europa League final.  Unai Emery, the Villa manager, has now won the Europa Cup with three different teams, all of which contain the word ‘Villa’ (Villareal, Sevilla and Aston Villa).  One for the quiz goers perhaps.

The main headlines at the moment are about a possible peace plan with Iran.  Trump has gone from saying he’s lining up further attacks on Iran to making noises that a deal is imminent.  Trump is coming under pressure to get the Strait of Hormuz open before the world falls into a recession. All was going well, oil prices dipped on the more positive news but has recovered some of those losses on tensions over Iranian uranium enrichment, with Iran President reportedly saying he will not back down.  Still, there is hope a deal will be reached, even if it is an interim measure. 

European and US equities ended higher yesterday, Asian markets followed suit with Nikkei up 2.7%, helped in part by a lower than expected Japanese inflation release overnight. USDJPY is still stuck around the 159 area as it has been for much of the week, a rare bit of calm for Yen.  Perhaps Japan will take advantage of the low liquidity over the long weekend and intervene again.  UK retail sales this morning came in even worse than the already shoddy expectations, GBP dropped on the release but moves were limited.  GBPUSD is now 1.3420, GBPEUR 1.1565.

Not a great deal on the calendar today so barring any news from Iran there is a good chance we get a quiet end to the week ahead of the long weekend.  Temperatures here are expected to reach 31°c over the weekend and continue in the high 20’s for the remainder of next week.  I’m looking forward to a good bit of sunshine, I wonder how long before we are complaining it is too hot!

While we enjoy the sunshine next week, I guess we’ll have to keep half an eye on the economic data due out, the highlights being RBNZ rate announcement, Aussie, Tokyo and German inflation, and the main event, the US core PCE.   

To the weekend sport, we have the Canadian F1 grand prix which includes a sprint race as well as the full race.  But of course the bigger news is the final matches of the Premier League season on Sunday.  Arsenal are already champions and the European places are almost decided.  The action of course is at the other end of the table, where we’ll find out whether Spurs or West Ham are relegated.  West Ham take on a Leeds side who have had a terrific end to the season but may not be anywhere near full strength, while Spurs face an out of form Everton side who have just three points from their last six matches.  Spurs are better placed, needing just a point to secure survival, but points are hard to come by this season.  I’m not looking forward to it, let’s just hope we have a weekend with no VAR controversy.

Have a great day, and a great long weekend as and when it comes. 

-  09.00 German IFO

-  13.30 CAD retail sales

-  15.00 US Michigan inflation, confidence expectations