• richard evans

Risk-off start to the week

Good morning


It is always a shame when a week begins with a risk-off tone, but this is one of those weeks. Weaker China retail sales and industrial production out early this morning has supported the recent thoughts of a China slowdown, while the situation in Afghanistan does little to help the overall risk sentiment. If I knew more about that I’d say something but I’ll refrain from doing so right now for fear of getting it wrong, suffice to say it looks like one almighty mess and a complete waste of time and life. Parliament is to be recalled in response to the Afghan crisis.


UK unemployment numbers due out tomorrow, there had been a fear that unemployment would increase dramatically at the end of furlough scheme, the feeling now seems to be that this will be nowhere near as bad as initial concerns. GBP a bit off recent highs, GBPUSD now 1.3860, EURGBP at 0.8505 (GBPEUR 1.1760).


AUD dips on news of extended lockdowns in Australia plus the China slowdown which won’t help matters. AUDUSD now 0.7340, AUDNZD 1.0440. Could see some more volatility in AUDNZD later this week when RBNZ meet, there is growing feeling they will lift rates from 0.25% to 0.5%. Some were even looking for a 50bps raise but this seems to be less likely now. Watch 1.0420 in AUDNZD, pretty much the lows from late 2020 and the lows since April 2020. Overnight 1.0450 AUDNZD put cost just 20 nzd pips.


In other news, Canada PM Trudeau has called a snap election for 20th Sept, I presume in the hope of getting re-elected with a majority. Meanwhile it seems ECBs Lagarde and BoEs Bailey have not been invited to the Jackson Hole event next week. The event will focus on a domestic invite list due to limited capacity. Some thinking they may use the event to raise tapering talk.


Today is pretty quiet in terms of economic data releases but the rest of the week looks pretty full. UK sees unemployment numbers tomorrow, inflation Wednesday and retail sales Friday, EU GDP tomorrow and inflation Wednesday, US retail sales tomorrow, CAD inflation Wednesday and retail sales Friday. All that and RBNZ, Norges Bank and PBoC rate announcements.


So perhaps today will be the calm before the storm. Which gives us plenty of time to savour Spurs fantastic victory over Man City yesterday proving the team can still compete even if Kane were to be sold. While we are all enjoying that, the last day of the England/India cricket test match has the potential to be very exciting. Of all the good things in sport over the weekend, I am sorry to say my fantasy football team has got off to a terrible start, partly due to me missing the deadline and leaving several of my big-hitters on the bench. My bench scored nearly as much as the team that played. Why do I bother!



- 13.30 US NY empire state manufacturing index

- 13.30 CAD manufacturing sales

- 02.30 RBA minutes

- 07.00 UK unemployment



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