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  • richard evans

Slow start to the week but plenty of economic to come

Good morning


A fairly quite start to the week, the US dollar finding just enough strength to keep the majors off their recent highs. GBPUSD is at 1.2740, EURUSD 1.0955, leaving GBPEUR 1.1630. USDJPY is 145.50, towards the upper end of the ranges we have seen since mid-December.


I’ve been reading a few pieces recently that suggest inflation may not fall as quickly as some are hoping and as such rate cuts may take longer to be seen. Whether this more sticky inflation is down to the supply issues emanating from the Red Sea supply issues or from ongoing government spending remains to be seen but this does serve as a warning that early rates cuts are not a certainty.


The latest we have from ECBs Lane is that June is a key meeting with regards to rate cuts, as only by then will they have enough of the wage data they regard as key, although he did make it clear ECB do look at other data on a regular basis.


Taiwan has re-elected the ruling DPP although they did lose a decent share of seats to the pro-China KMT. The loss of sets by DPP means they also lose their majority which is likely to mean more engagement with China going forward. I read this morning that Biden has sent a single that it does not support Taiwan independence, I’m not sure I’ve seen that before and I’ll need it confirmed before I believe it. If this is true, it could help improve US-China relations but for now China are unhappy that US sent messages of congratulations to the Taiwan leader Lai. Meanwhile, China President Xi has said Europe-China should cooperate more closely to promote peace, stability and prosperity.


It’s a US holiday today, Martin Luther King day. The economic calendar is light, but does get busier through the week, starting with UK unemployment early tomorrow morning. In the meantime, the world’s good and great meet in Davos for the World Economic Forum. They have released their Chief Economist Outlook for 2024, I’ve not had a chance to study it but the three main ponts are subdued global conditions, geopolitical uncertainty and the potential impact of AI.


Its pretty cold this morning and it looks like we’re in for a few days of low temperatures, reaching well below zero overnight. In Iceland though, things are hotting up as lava from two new fissures that have opened up is taking over some of the town of Grindavik, despite attempts by workmen to build a wall to redirect the lava flow.


Limited sport over the weekend but it was a pleasure to see how dominant Spurs were at Man Utd, although for all their possession could only manage a draw. Still, a draw at Old Trafford is never a bad thing, Spurs still without many of their top players due to injury or international duty. Man Utd’s new owner, Sir Jim Ratcliffe, was there to see the match.


Finally, congratulations to Ronnie O’Sullivan for fighting back from 6-3 down to win his eight Masters title, despite him not playing anywhere near his best. He knows he was let off the hook by the runner-up Carter. O’Sullivan played a few shots left-handed, which reminded me of the time he upset Alain Robidoux by playing some of the match left-handed in the 1996 world championship. He won. The greatest snooker player of all time? Yes, probably with either hand.


Have a great day, stay warm!


- 10.00 EU industrial production

- 15.30 BoC business outlook

- 22.00 NZ business confidence

- 00.30 AUS Westpac consumer confidence


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