Good morning
ECB did indeed cut rates 25bps yesterday to take rates to 3.25% in a unanimous move that had been widely expected. The cut is notable as it is the first back-to-back rate cut by ECB since 2011 and follows similar sized cuts in June and September. Lagarde said that recent weaker inflation together with lower than expected economic data helped justify the decision. Future decisions remain data-dependent, ECB still determined to bring down inflation although Lagrarde did seem to acknowledge the risks now for inflation were more to the downside.
Euro did weaken through the day, with EURUSD trading down to 1.0810 at one stage, by the London close it was a few pips higher at 1.0835, while GBPEUR finished at 1.2000.
Yesterday’s US data, including retail sales, Philly fed survey and initial jobless claims all came in stronger than expected which helped push USD higher, explain some of the decline in EURUSD. GBPUSD traded down to 1.2980 after the US data but closed just around the 1.3000 area.
This morning, much stronger than expected UK retail sales data sent GBP higher, with GBPUSD reaching 1.3070 and GBPEUR to its highest level since April 2022, hitting 1.2055. Both pairs are a few pips lower as I type. Other GBP crosses all higher after the numbers, GBPJPY up at almost 196.00, while we are currently 1.9450, 2.1520 and 1.8020 agaisnt AUD, NZD and CAD respectively.
Overnight we had Japan inflation which was marginally in line with expectations. The numbers had little in the way of market impact, with UDSJPY around the 150.00 area. We haven’t heard from Japan officials on Yen for a while, obviously since USDJPY pushed below 150.00 but it is little surprise that now we are back up around that area we are hearing the old ‘we are watching yen levels with sense of urgency’, this time from Japan MoF’s Mimura.
China GDP was also on offer in the early hours of this morning, together with retail sales and industrial production. All were better than expected which has brought a bit of calm to China watchers who are worried about their slowing economy. AUD, strongly connected to the fortunes of the Chinese economy, found a bit of support from the healthier numbers.
Gold prices have hit new highs, trading up to US$2,714 this morning. The ongoing unrest in the Middle East is clearly having an impact, Israel have confirmed the death of Hamas leader Sinwar, while Hezbollah has talked talking about an escalation phase of hostilities. I also wonder whether China have resumed their much publicised gold purchases. Of course we still await Israel’s potential attack on Iran, which is likely to see gold push higher still.
Americas Cup today, GB will be hoping for a repeat of Wednesday with a couple of wins to level the series, while New Zealand could get within one point of overall victory should they win both races.
In cricket, England had the opportunity to win the latest test match against Pakistan after bowling the hosts out for 221 in their second innings. I was expecting to see a healthy score from England this morning in their run chase, instead I see a pretty horrific collapse which saw them bowled out for just 144.
To the weekend, and we’re back to domestic football. I’ll have to mention that Mark’s Leeds play this evening against Sheffield Utd, something of a top of the table clash with Sheffield Utd currently in second place, Leeds just below them in fifth but with the chance to pull level should they win. Spurs, looking to put the embarrassing loss to Brighton behind them, take on West Ham on Saturday. The pick of the bunch could well be Liverpool v Chelsea on Sunday.
Formula One returns after a break of several weeks, with the US Grand Prix. Will McLaren continue their winning streak or will Red Bull, Ferrari and the others come back from the break with a spring in their step?
And finally in sport, a cheating scandal has erupted at one of the world’s premier sporting events, the World Conker Championship. The winner, 82 year old David Jakins, who has competed in the event since 1977, has been accused of cheating after a metal conker was found in his pocket. He insists it was just for a bit of fun, but after he demolished his opponents conker in one hit in the final, an investigation has started as to whether he used it in competition.
I’m out and about today seeing a client and a potential client, fingers crossed for that! I’m hoping the weather stays dry, makes the drive far more pleasurable. Its pretty foggy outside, I’m rather hoping that clears before I set off. We’ve had some surprisingly warm days recently which means the grass has been growing so back on the mower on Saturday, although the forecasts suggests it’ll be quite wet so whether I actually get to cut the grass is dependent on the weather.
Have a great weekend
- 13.30 US housing starts
- 14.30 Feds Bostic speaks
- 15.00 Feds Kashkari speaks
- 17.10 Feds Waller speaks
- 17.30 Feds Bostic speaks
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