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Risk sentiment remains high in otherwise slow start to the week

Good morning


We had a fairly slow day on Friday, equities were mostly a fraction higher, US dollar was a fraction lower.  By the close GBPUSD was around 1.2670, EURUSD around 1.0820 and since the open we’ve not veered more than 10 pips or so from those levels, a flurry of USD buying soon ran out of steam.  GBPEUR is at 1.1700, USDJPY at 150.45. 


The key focus for markets remains inflation and the resulting timing and pace of rate cuts by the likes of Fed, BoE and ECB.  The feeling is that the two former central banks will push back on rate cuts, while ECB is perhaps the favourite to cut first despite comments from ECB officials warning of the risks of cutting too early.  We hear from Lagarde today although she rarely gives much of interest away.


There has been some talk over the weekend of a potential peace deal on the table between Hamas and Israel which would apparently include the release of hostages by Hamas, although the details are sparse and until anything is signed an implemented we know we should not hope for too much.  Meanwhile the UK and US launched new airstrikes in an attempt to prevent Houthis attacks on shipping in the Red Sea. 


In Ukraine, it is two years since the Russian invasion.  Zelensky warns of a possible new offensive by Russia forces, likely to come before the summer, while he adds that Ukraine have their own offensive plans that will not be telegraphed in the same way the previous, and dare I say doomed, offensive was.  Russia does seem to be getting the upper hand for now.   


It isn’t the busiest start to the week in terms of economic releases, indeed the week as a whole may not be too inspiring.  By the end of the week we will have made it into March, that’s come around pretty quickly.  The days are getting longer, and hopefully the weather will turn a little warmer and drier.  For now, its dry here but there’s a pretty decent wind shaking the trees.


Plenty of sporting action over the week.  Mark will be upset if I don’t mention Leeds victory over Leicester which opens up the title race in the Championship and perhaps more importantly cements Leeds place in the automatic promotion places.  There wasn’t really much else to cheer about.  Engfland lost the cricket test series to India this morning, England had built a reasonable first innings total but were all out for 145 in their second innings which left India a target they reached easily. 


A similarly dismal display from England rugby team saw them lose to Scotland in the six nations, congratulations to our friends north of the border for that.  Liverpool beat Chelsea in the EFL cup with a late winner in extra time.  As a neutral I thought it was a reasonably exciting match although I’d liked to have seen it go to penalties. 


Its mostly FA cup fixtures this week, Spurs cleverly sitting this out in order to concentrate on the league.  We also have the start of the first F1 race of season this week, it will be interesting to see whether any teams can challenge the dominance of Red Bull.   Judging by early testing, Red Bull are likely to remain on top, Verstappen is already the odds on favourite to win the title again. 


That’s all for now, hope it gets more interesting as the week goes on!


-  11.00 BoEs Pill speaks

-  15.00 US new home sales

-  16.00 ECBs Lagarde speaks

-  23.30 Japan CPI


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