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  • richard evans

Some calm returns to markets, US CPI as expected

Good morning


US data releases will be one hour earlier at 12.30 or 14.00 london time due to the US clock changes that took place at the weekend.


In addition, FX option expiries will be 14.00 london time, not the usual 15.00 london time.


This will be until Sunday 26th when we change our clocks in the UK



A little calm returned to the equity markets as US and Asian exchanges mostly finished on a positive note as contagion risks from the SVB and Signature Bank collapse seem to have diminished somewhat. Rating agencies have downgraded other US regional banks but for the time being things have settled down.


US inflation came out pretty much bang in line with expectations, the US dollar turned one way, then the other, and ended up pretty much where it started. GBPUSD now 1.2160, EURUSD 1.0735, both not far from levels we saw this time yesterday. An interesting support area appearing in GBPUSD around 1.2140 which has been tested several times since Monday afternoon, holding each time. GBPEUR a little lower at 1.1325 but still holding up pretty well.


US retail sales are out this afternoon but more attention is turning to ECB rate announcement tomorrow where a 50bps rise is still the most likely outcome, the question really is how high will rates go from there. Talking of rates, obviously attention is still on the Fed next week which could see anything from a cut of 25bps to a rise of 50bps. Can’t remember a meeting that has such a spread of possibilities. Bowman spoke yesterday but due to the blackout period ahead of the Fed meeting gave little away with regard to policy changes but did make clear the Fed were monitoring developments in the US banking system, adding that at the moment it seems fairly steady and resilient.


Before then of course we have the UK budget, where confirmation of the rise in corporation tax from 19% to 25% is still likely but I think the Chancellor will be very cautious about making too many dramatic changes after the shenanigans last year and ongoing uncertainty over the economic outlook.


HSBC have adjusted their USDJPY forecasts for Q2 and Q3, to 130 and 125 from 125 and 122 respectively but still look for a drop to 120 by year end. With USDJPY currently 134.55 this does give a lot of profit potential if they are right although do bear in mind there is quite hefty cost of carry for long yen positions. Might see if I can find some cheap downside trades though just in case.



- 10.00 EU industrial production

- 12.30 UK budget

- 12.30 US retail sales, PPI

- 21.45 NZ GDP

- 23.50 Japan trade

- 00.00 AUS consumer inflation expectation

- 00.30 AUS unemployment

- 04.30 Japan industrial production


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