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  • richard evans

Powell sends USD lower

Good morning

Welcome to December.

A bit of a rollercoaster day for USD yesterday which saw it push higher through the afternoon as risk sentiment waned after some weaker than expected US data, GBPUSD hitting as low as 1.1900, EURUSD down to 1.0290. And there it stayed until Powell spoke after the London close, and USD turned abruptly, GBPUSD traded up to 1.2120 and EURUSD to 1.0465. What did Powell say that warranted such a move? Well unless I’m mistaken, not a lot that we didn’t know already. He did say the pace of rate rises would slow, the Fed has more work to do, needs evidence inflation is falling and still sees the peak higher than the Sept forecasts. I wonder if it was this last point that turned USD, the fact he didn’t talk of an even higher peak as Bullard as done in recent days.

USD is just off those lows, GBPUSD and EURUSD now 1.2100 and 1.0420 respectively which leaves GBPEUR 1.1610. GBP actually looks pretty healthy despite a Telegraph article that says UK will likely see some sort of strike chaos almost every day until Christmas, with nurses, teachers, rail workers, postal workers, even driving instructors looking at strike action.

Talk that China are relaxing Covid restrictions after it found Omicron the be less harmful than feared was doing the rounds on social media although still much of the news I read talks of Chinese police clamping down on protestors. China still has a low Covid death rate, just over 5,000 deaths have been recorded since the outbreak which is just three in every million, compared to nearer 3,000 per million in UK and US. Well, so they say. As with all numbers out of China these should be taken with a pinch of salt. But on those numbers we could see China reopening earlier than expected, of course this will not be giving in to protests, but clever work on the part of the Chinese govt. I’d still like to know if they are getting western vaccines over there.

Otherwise there seems to be little in the way of news. There is some pretty incredible footage of the Hawaiian volcano that erupted recently on the internet, it is a shame we cannot harness that power to heat our homes. Something for the future perhaps.

In the world cup, France, Poland, Argentina and Australia all made it through , setting up a France/England quarter final should both team survive their first knock-out matches. This afternoon we have Croatia taking on Belgium, I think Belgium might need a win in order to stay in the competition unless Morocco lose heavily to Canada, while this evening sees mighty Germany, currently bottom of their group. Needing to win against Costa Rica and hoping Japan get nothing from their match with Spain. All should be quite entertaining.

Some PMIs out today, several central bank speakers, but much of my day will hopefully be spent watching some football and trying not to eat the kids advent calendars. Its quite simply a bar of chocolate with 24 squares, or triangles actually as it turns out, which is going to take quite a lot of will power. I do like Cadbury chocolate…..

- 09.30 UK S&P manufacturing PMI

- 10.00 EU unemployment

- 13.30 Core PCE, personal income/spending, initial jobless claims

- 13.30 BoJs Kuroda speaks

- 14.30 Feds Bowman speaks

- 14.30 CAD S&P manufacturing PMI

- 15.00 US manufacturing ISM

- 16.45 ECBs Lane speaks

- 17.30 ECBs Elderson speaks

- 02.00 RBAs Lowe speaks

- 02.40 ECBs Lagarde speaks

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