Good morning
Global equities continue to slump, S&P 500 was down over 3% yesterday, Nasdaq down over 4%, while Asian markets were generally lower, although most had been even lower through the day so the closing numbers were actually something of an improvement despite being negative. The only one to buck the trend were Chinese stocks which somehow managed to post gains despite some reports PBoC should switch from easing to tightening. USDCNY fixed at 6.7134, although the pair is actually trading lower than that right now, while commodity currencies such as AUD and NZD are also lower. US dollar remains bid although Fes Bostic has dampened expectations of a 75bps rate rise, calling it a low probability. A few Fed officials speaking today, lets see if they mention a 75bps move at all.
GBP continues to trade towards to the lower end of recent ranges against USD and EUR, with GBPUSD at 1.2330 and EURGBP 0.8565 (GBPEUR 1.1675). In GBPUSD, 1.2375 seems like a key level to watch. UKs ForSec Liz Truss has said she is willing to scarp parts of the Northern Ireland protocol as early as next week, saying there is little hope of a deal with EU. This would mean the UK breaching its obligations under the Brexit Withdrawal Agreement and would no doubt lead to repercussions from EU. Not sure the UK really needs a trade war with EU just as BoE are talking of recessions, but I wonder if the recent NI election which saw Sinn Fein make large gains has forced the issue. Difficult for GBP to rally with that lurking in the background.
German ZEW data this morning could possibly impact EUR. EURUSD currently 1.0575, up a healthy 75 pips from this time yesterday, although still very much at the lower end of the range over the past month or so. Still some talk of parity in the weeks ahead, a strong US inflation reading tomorrow could perhaps open the door for further USD gains.
Romania are set to raise rates 50bps today, from 3.0% to 3.5%, some are actually looking for a full 1% increase. EURRON remains within its normal bands. TRY looks like it could be breaking out of its recent range, having been reasonably stable since the fun and games back at the turn of the year, it has now broken above 15.00 and sits now 15.20. For many though, EURTRY is the key and given EUR has weakened along with TRY it is little surprise that still sits within its range at 16.05.
I saw an episode of a new TV programme called The Games, where ‘celebrities’ compete against each other in events such as diving, javelin, gymnastics and weight lifting. When we watch the top athletes compete, it is very difficult to appreciate just how incredible they are. I think a while back I suggested that in each Olympic discipline, a normal person should also take part, just so we have a suitable gauge as to how fast or strong the real athletes are. I have to say The Games was not particularly interesting but did at least show how difficult it is to run a competitive 400m race, or dive gracefully off a 3 metre board. Can’t say I recommend the show unfortunately, the format was too slow, too much chat and not enough action. Not quite Superstars, that’s for sure.
- 10.00 German ZEW
- 12.40 Feds Williams speaks
- 18.00 Feds Waller, Kashkari speak
- 18.20 ECBs de Guindos speaks
- 20.00 Feds Mester speaks
- 01.30 AUS Westpac consumer confidence
- 02.30 China CPI
- 07.00 German CPI, HICP
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