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  • richard evans

RBA raise rates but it's USD that pushes higher

Good morning

We awake to find the US dollar a touch stronger, perhaps it was Kashkari’s comments that has supported USD, he said is worried inflation could tick higher again and that Fed rate rises may not be over. GBPUSD is at 1.2320, EURUSD 1.0700, leaving GBPEUR a bit lower at 1.1515.

RBA raised rates overnight by 25bps to 4.35% in a move that was widely expected but AUD has failed to respond positively, AUDUSD is down at 0.6430 and GBPAUD is currently 1.9160. RBA managed a dovish tone while raising rates, casting some doubt as to whether further rate rises will be required and I am sure the disappointing China trade data overnight must have had a negative impact on AUD as well. It had been expected around +$80bn, came in at +$56.5bn. It’s still a hefty surplus but isn’t what China will want to see. Mind you their surplus is about the same size as the US trade balance is negative. That’s out this afternoon, expect a deficit around US$60bn.

USDJPY was at 149.75 at expiry which gave rise to a small profit from the option I’d looked at last week. The AUDUSD option I looked at yesterday however isn’t looking so clever, some 100+ pips out of the money but fortunately only cost 10 usd pips. Still some hours to go but I’m not expecting anything from it now.

In other news I see Putin is looking to stand for re-election in 2024 which would keep him in power until 2030. I wonder what the world will look like then. Hopefully not quite what Putin would like to see.

In terms of today, we’ll be watching the Kings speech later this morning. Romania are expected to keep rates unchanged at 7%, while the US trade balance is likely to show a decent deficit once again.

I’m out of the office tomorrow so I’ve added Wednesdays calendar as well. I’m actually down on the Isle of Wight again, I saw a report that the Northern Lights were visible on IoW, something I’d love to see but so far never have. The correct term is Aurora Borealis. There is another sight that can be seen in the night skies, more rare than the Northern Lights, but that has been seen in parts of the UK. It is a thin, purple ribbon of light that glows for 20 minutes or so if you’re lucky. And its name? Steve! Yes, Steve. I don’t think the name quite captures the wonder of the phenomenon.

- 10.00 EU PPI

- 11.30 UK Kings speech

- 13.00 Romania rate announcement

- 13.30 US trade balance

- 15.00 Feds Waller speaks

- 17.00 Feds Williams speaks

- 02.00 NZ inflation expectations


- 07.00 German HICP

- 09.30 BoEs Bailey speaks

- 10.00 EU retail sales

- 10.15 Feds Cook speaks

- 14.15 Feds Powell speaks

- 23.50 Japan current account

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