Good morning
It was mostly a fairly quiet day yesterday, but GBP strength through the late afternoon took GBPUSD up to new 2025 highs around 1.2715. GBP also gained against EUR, reaching a couple of pips short of 1.2100, and other crosses such as GBPAUD, GBPNZD and GBPCAD reaching almost 2.0120, 2.2300 and 1.8225 respectively, the latter helped of course by CAD weakness ahead of a possible tariff announcement in the coming days.
There did seem to be some USD weakness at the time but the move higher against EUR and other crosses suggested it was more a GBP move, although it wasn’t clear what was behind this. Trump did have some tough words about the EU, saying it was created to harm America, which I guess in making it a more powerful trading partner I suppose he could be right. He has threatened a 25% tariff on EU goods, the EU has responded with the threat of retaliation in tariffs are imposed. Starmer is meeting Trump today but I can’t say I’m too confident that they’ll really hit it off. For now GBP has backed off those highs, GBPUSD now 1.2670, although GBPEUR is holding just below that 1.2100 level.
It’s a pretty decent day data-wise today, with US GDP likely to be the key but I’ll be watching the initial jobless claims too for any sign of that weakness in the US jobs market that we’ve talked about, ahead of the US nonfarms next week. A host of Fed officials will be speaking today, not sure we’ll get much other than the usual ‘rate cuts will be slow and gradual’ although perhaps that message could alter if the US data is on the weaker side. We’ll keep an eye on Trump tariff talk as he’s recently given conflicting statements about Canada, Mexico and the EU, the White House suggest 4th March remains a deadline, Trump has indicated 2 April is more likely.
Trump yesterday said that Zelensky will be signing a ‘big deal’ on Friday, whereby Trump insists the US will get the money back they have ploughed into saving Ukraine, and make a lot in the future. There is something odd about this deal that involves Ukraine’s mineral reserves in that there doesn’t seem to be any concrete ongoing support for Ukraine as part of the deal. Without US and European help, Ukraine will potentially fall to Russia which would mean both China and Russia controlling vast amounts of the world’s rare earth minerals, something the West surely doesn’t want. I don’t know if Russia’s real reason for its invasion is for those reserves or just to rebuild the Soviet Union, but surely Zelensky cannot sign a deal unless there is a firm deal that prevents Russia invading further. As it stands, Russia have seized some $350bn of resource reserves in Ukraine since its invasion, according to Ukraine.
BP has said it will focus on oil and gas production over renewables in a pretty big change of strategy following some disappointing results.. Its shares fell on the day but were off the lows at the close. Now, I’m all for saving the planet but my domestic gas and electricity bills are going up again, the standing charge is much higher than it was a few years ago and energy firms are making substantial profits, paying large dividends to shareholders just as the water companies have done, while our bills remain at elevated levels. Natural Gas prices are creeping higher again but are still considerably lower than they were a couple of years ago. It must surely be time to order energy companies to reduce domestic bills, instead the Ofgem price cap is rising and is due to rise again. Not happy.
Spurs lost to Man City last night, I did watch it and I have to say I wasn’t too disappointed. OK, losing is never great but their second half performance was mildly encouraging. Man Utd came from behind to secure three valuable points against Ipswich, Arsenal saw their title hopes dealt another blow as they could only manage a draw against Forest, while Liverpool extended their lead at the top to 13 points with a win over Newcastle.
In cricket, I warned that England’s match against Afghanistan would be difficult and indeed it proved to be, England losing by eight runs having failed to reach the Afghan target of 325 before being bowled out with the penultimate ball of the innings. England are now out of the Champions Trophy, leaving New Zealand and India, and most likely South Africa and Australia, but possibly Afghanistan, in the semi-finals.
I’m out and about once again Friday so there will be no report tomorrow. I’ve attached Friday’s calendar below, US core PCE certainly the main event but CAD watchers will be looking at Canadian GDP, USDCAD now 1.4345 and still waiting on a tariff update from Trump. Still got the 1.4500 USDCAD Call from a couple of days ago that cost a mere 20 cad pips, its almost at the stage where we could close half of it out at a profit to make the remainder.
Next week could be a big one, with US ISM PMI’s and employment numbers including the nonfarm payrolls, EU inflation and ECB rate announcement, to name a few. Not much UK data next week but BoEs Bailey will be appearing in front of the Treasury Select Committee Wednesday.
We’ve had some dismal weather recently but a quick look ahead to the weekend and the coming week suggest we’re in for a lot of sunshine. Don’t confuse that with warm temperatures, but I’ll take a bit of sunshine even if it means frosts overnight. We’re really hoping for clear skies over the next couple of nights, it is the last time until 20240 that we’ll be able to see seven planets in the early evening sky. Mercury, Venus, Jupiter and Mars should be visible with the naked eye, the remainder will require binoculars or a telescope and even then Saturn may be difficult to see as it’s the nearest to the sun. Find somewhere dark and see if you can spot them.
That’s about all, have a great day and a great weekend as and when it comes. It’ll be March when you get your next report, where is the time going?
- 10.00 EU consumer confidence, sentiment
- 12.30 ECB minutes
- 13.30 US GDP, durable goods, initial jobless claims
- 15.00 US pending home sales
- 15.00 Feds Barr speaks
- 16.45 Feds Bowmans speaks
- 18.00 Feds Barkin speaks
- 18.15 Feds Hammack speaks
- 20.15 Feds Harker speaks
- 23.30 Japan Tokyo CPI
- 23.50 Japan retail trade
Friday
- 07.00 German retail sales
- 07.00 BoEs Ramsden speaks
- 08.55 German unemployment
- 12.00 India GDP
- 13.00 German HICP
- 13.30 US core PCE, personal income/spending
- 13.30 CAD GDP
- 14.45 US Chicago PMI
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