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  • richard evans

Should he stay or should he go now......?

Good morning

How can Boris Johnson survive this? More MP’s resign this morning, taking the total to well over 50. Even those who supported him in the recent confidence vote are saying enough is enough. Many of his own cabinet members who have not yet resigned are urging Johnson to go. Even Zahawi, who was appointed as Chancellor a couple of days ago, tells Johnsoln he should go. Surely he is going to have to go, but so far continues to refuse to step down. If I take too long to write this there is a decent chance he’ll have gone by the time I send this. Must type quicker! One thing Johnson has done though is rejected Sturgeons request for another Scottish referendum.

In the markets, the US dollar has taken a breather from its recent show of strength. Don’t get me wrong, its not turning, but has not made any gains overnight, not this morning so far. GBPUSD is 1.1950, up from yesterday lows around 1.1875 and has managed to hold above 1.1900 since yesterday evening. EURUSD continues to lag, currently 1.0185 which means GBP is looking strong against EUR, EURGBP now 0.8530 (GBPEUR 1.1720). Until GBPUSD is back above 1.2000-1.2050 it will continue to look very vulnerable.

FOMC minutes yesterday were on the hawkish side but this has been expected and as I mentioned yesterday is a bit of old news. Another 75bps rise in July still looks likely as the Fed continue to be concerned about higher inflation, however growth risks do seem more skewed to the downside.

Aussie trade data came out better than expected with the surplus up to almost AUD16bio. The data hasn’t really done much for AUD, AUDUSD 0.6810, 30 pips higher than pre-release levels, AUDNZD up just ten pips tor so at 1.1035. GBPAUD affected most, now at 1.7530, 45 pips or so lower than before the release but of course the pair has been far more affected by GBP weakness in recent days, having been up near 1.7800 at the start of the week.

Gold has had a rough couple of days after breaking through the support area I talked about a week or so ago that had dated back to August 2021. At the time it was coming in just above $1803, since then we have traded down to $1732 or so but managed to hold in mid-1740s for the past few hours of trading. A lot depends on which direction this dollar move takes.

Something that hasn’t really been affected by the dollar over the past couple of days is Bitcoin, which I find rather surprising. Why anyone would prefer to hold Bitcoin over gold I really don’t know. Perhaps it’s still the idea that it is more likely to double in value than gold, although let’s be honest, its also more likely to halve in value.

On this day back in 2005 I made my way to work as usual, taking the Metropolitan line and getting off at Aldgate for a short work to our office. The service hadn’t been brilliant for a while but this was a reasonable journey. Two hours later, there were reports of a power surge on the tube network and I remember being relieved to have avoided more travel misery. The relief soon turned to shock as it became clear this was far worse than a power surge. It was a terror attack that involved four bombs, resulting in the killing of over fifty people and injuring hundreds more. Each time I get off the tube at Aldgate I remind myself how lucky I was to have a job that required me to be at my desk earlier than many. Its amazing how it still affects me today and I wasn’t even involved.

- 10.45 ECBs Lane speaks

- 12.30 ECB minutes

- 13.30 US initial jobless claims

- 13.30 CAD trade balance

- 14.00 BoEs Mann speaks

- 15.00 CAD Ivey PMI

- 17.05 BoEs Pill speaks

- 18.00 Feds Bullard, Waller speak

- 00.50 Japan household spending, current account

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