Good morning
US retail sales yesterday came in worse than expected at -0.8% for January against an expected -0.2%, while the December reading was revised lower to add to the misery. A better Philadelphia Fed manufacturing survey and mildly better initial jobless claims were not enough to stop a bout of USD selling which saw GBPUSD trade from 1.2545 to 1.2595, and EURUSD from mid to high 1.07’s.
Overnight we saw GBPUSD test the 1.2600 area, breaking above briefly by a few pips before settling bback, and this morning a quite astonishingly decent set of UK retail sales numbers sent GBPUSD again to the 1.2605 area. Once again, the move was short-lived and as I type we are back to the 1.2580 area, and with EURUSD at 1.0760 it leaves GBPEUR 1.1690.
GBP has shrugged off the widely reported recession, perhaps the comments from both BoEs Mann and Greene yesterday, both erring on the hawkish side, reminded markets that regardless of the general economic conditions, inflation is still too high and has a long way to go before either will be comfortable with lower rates.
USDJPY spiked lower following the US retail sales number, reaching 149.50 but it soon regained the 150.00 area and now sits 150.20. Japan’s Nikkei 225 traded close to its all-time highs from way back in 1989, boosted by Ueda sounding a little less certain of an early move away from negative rates and also by the notion that even if BoJ do lift rates a touch, we’re still looking at extremely accommodative monetary policy thereafter.
So, given we’ve had a week of data that has surprised both to the upside and downside, we’re not really far removed from levels seen at the start of the week. USD is currently a touch stronger than it was on Monday, the higher inflation readings being responsible for that, but we are not talking about huge moves. I would not be at all surprised to see a relatively quiet market now until the next FOMC meeting, the results of which will be seen on 20th March where the updated dot plot will be released.
In other news, India managed a total of 445 in their first innings, a pretty decent total given the three early wickets. England are 31-0 at the time of writing, they’ll be hoping for a better fist innings than they have managed in the two previous tests. In football it’s a full weekend of action in the Premier League, Spurs will be hoping to cement their fourth place with a win over Wolves. The late Saturday match of Man City v Chelsea could be the pick of the bunch.
Finally, I have to express my disappointment that the FA cup will only be shown on TNT from the 2025-26 season. The final will still be free-to-air, but I’d always thought there were some sporting events that were really always going to be safe from the wallets of TV companies. Not so. The world moves on I guess, one day perhaps we’ll even see the FA cup final itself on pay to view rather than BBC, ITV and the like.
Have a great weekend as and when it arrives. We might even get lucky and stay dry for a day or two. The garden has been neglected in recent weeks due to the weather, it could be time to get back out there…
- 13.30 US PPI, housing starts, building permits
- 14.10 Feds Barr speaks
- 15.00 US Michigan sentiment
- 17.10 Feds Daly speaks
- 19.40 BoEs Pill speaks
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