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  • richard evans

Tool boxes in space

Good morning

The US dollar tried to make back some of its recent losses yesterday, with GBPUSD trading down from almost 1.2550 to 1.2450, EURUSD moved down from 1.0915 to 1.0850. A mildly better initial jobless claims number and then a better than expected Michigan sentiment survey helped push the USD higher, although by the end of the London session it had lost some of its gains and this morning we are back to 1.2520 and 1.0915 respectively. That same USD strength helped USDJPY push higher through the afternoon, hitting a high around 149.75 before briefly slipping back below 149.00. It now sits at 149.20

GBP was not really moved by Hunt’s Autumn statement. The headlines looked reasonable enough but he didn’t really have a lot he could get his teeth into and with possibly just one more budget before the next general election it won’t really be enough to convince the public that they are strong enough to carry us through the next few years. Still, it could be worse, as we found out last September. Mind you whatever savings people may make are likely to be swallowed up in January’s energy price rise.

USDCAD has moved out of its ever-decreasing range but nothing is ever simple of course. It first broke higher, trading up from 1.3700 to 1.3760, before turning completely and now sits down at 1.3665. More perhaps indicative of USD weakness than CAD strength, particularly as BoC Gov Macklem sounded pretty dovish, saying rates are now restrictive enough and even mentioned possible rate cuts even before inflation had returned fully to target.

It is Thanksgiving today, our friends across the pond will be tucking into their turkey later. I saw a warning that US firefighters put out about the risks of deep frying a turkey, they had a whole turkey that they lowered into a bucket of boiling fat. The fat boiled over and the resulting fire was pretty horrendous. But deep-frying a whole turkey! I get the odd bit of fried chicken, but a whole turkey! Don’t they have ovens in America?

On the subject of turkey, the Turkish central bank will be announcing their latest interest rates this morning. They are currently 35%, a raise of a further 2.5% is expected but is unlikely to offer any help to TRY. USDTRY is now pretty much at the highs around 28.83, while EURTRY is 31.38, not too far off its own historic highs.

A fairly full economic calendar today goes slightly against my idea that we can all sit back and relax for the next couple of days, swapping screens full of currency prices and charts with screens full of bargains from Amazon, Nike and other retailers in the black Friday sales. Perhaps once we get the PMIs and ECB minutes out of the way we can take it a bit easier.

In other news, I saw an alarming news report that talked of a possible outbreak of undiagnosed pneumonia in children, with some hospitals overwhelmed with sick children. WHO has asked China for more information. The hope is that the lifting of Covid restrictions has just increased the spread of flu-like illnesses but of course we know what happened around this time four years ago. We now know Covid was flagged to scientists in Dec 2019, but it was actually 20th Jan 2020 when I first mentioned the outbreak of Covid in China, at that time just 138 new cases had been reported and we all know what happened after that. I’m not one for scaremongering but it would be wrong to completely ignore news of another possible respiratory infection.

Closer to home, Geert Wilders has won the Dutch elections and said he wants to lead the country’;s next government. I first mentioned Wilders back in March 2017 when Wilders party won 20 seats, making it the second largest party. They are set to win 37 seats this time, while Rutte’s current ruling party looks like it will finish in third place. Wilders is known for his anti-EU and anti-Islam stance and has promised a referendum on leaving the EU, although I believe it would be unlikely such a vote would lead to a Dutch EU exit. Wilders will struggle to create a coalition, the three other big parties ruled out joining any government led by Wilder, but his win will shake the EU and give other right-wing parties more confidence.

Meanwhile Farage is doing himself no harm in ‘I’m a celebrity’ having been provoked by one of the other contestants but dealing with it very well. As always, there is some debate over how many of the contestants are really celebrities, I reckon I know of just half of them. Franke Dettori and Tony Bellew have now joined. I’m hoping for some fireworks, as I recall the contestants in recent series have all been far too friendly.

Finally, even further from home, looking up in the night sky with a pair of binoculars, you may be able to see something rather unusual. Astronauts on the International Space Station dropped a box of tools which is now orbiting the earth just a few minutes ahead of the ISS. It is surprisingly shiny and as such may even be seen with the naked eye. In the UK we only have a few more days to see it and there is only a very small time frame to see it, something like 2-3 minutes. 6.15pm this evening and just after 7pm Friday.

- 09.00 EU manufacturing, services PMI

- 09.30 UK S&P manufacturing, services PMI

- 11.00 CBRT rate announcement

- 12.30 ECB minutes

- 16.00 ECBs Nagel speaks

- 21.45 NZ retail sales

- 23.30 Japan CPI

- 00.01 UK GfK consumer confidence

- 07.00 German GDP

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