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  • richard evans

Uneasy calm ahead of a potentially volatile week

Good morning

For this week, US data releases will be one hour earlier at 12.30 or 14.00 london time due to the clock changes.

In addition, FX option expiries will be 14.00 london time, not the usual 15.00 london time.

Well I hope you had a good weekend. Congratulations to South Africa for winning the rugby world cup, beating New Zealand. England came third, which is possibly better than they were expecting, still a bit of ‘what could have been’ after their close defeat to South Africa in the semi finals. Unfortunately England aren’t looking quite as good in the cricket, another dismal defeat yesterday leaves us rooted at the bottom of the table having won just one game and lost five.

Spurs remain top of the table after beating Crystal Palace Friday evening, although wins for the four teams below them mean the lead remains at just two points. Tyson Fury somehow managed to win a split points decision in his boxing match against Ngannou. Sport was hit by the sad death of an American ice hockey player playing in the UK who passed away having suffered a freak injury during a match at the weekend. A real tragedy, as was the passing of Friends star Matthew Perry.

On the subject of tragedy, of course the Middle East situation is the top of the headlines where not one, but thousands have been killed. Israels grounds operations in Gaza continue, targeting Hamas but of course there are many innocent people caught up in the fighting, including those at a hospital who have been told to evacuate by Israel but they are unable to do so. I am sure some of them are threatened by Hamas but others will just be too poorly to move. Israel want rid of both Hamas and the underground network of tunnels used by Hamas.

Outside the middle east, there are worrying protests that I fear will create a real ‘them and us’ scenario that I am still convinced the vast majority of us do not want, but as has been the case for a while now, the minorities seem to shout louder and therefore are heard more. We must be careful that the hateful words of a few do not spread. The reports of potential attacks at a regional airport in Russian is a sign of how things can spiral out of control. Protests at the moment are generally peaceful, in London nearly 100,000 protestors marched for peace, but of course there will be some whose definition of ‘peace’ is more akin to death to Israel and probably the West as well. That’s not something we want to see or that should be tolerated by anyone in our society.

‘Enough of that’ I hear you cry, and rightly so. There isn’t much I can add that will offer anything new or helpful to the situation and I don’t want this to become a platform for political views. So, onto the markets.

We have a big week ahead with BoJ, BoE and Fed rate announcements, EU GDP data, various PMIs, and a host of US employment data which culminates in the nonfarm payrolls release on Friday. Markets are likely to be a lot more volatile than we’ve seen over the past few days. Since Wednesday morning GBPUSD has been 30 pips or so either side of 1.2120, where we trade right now. EURUSD has been similarly rangebound, now 1.0570 and has been broadly within g 30 pips either way of that level.

USDJPY had a brief sell-off this morning which took the pair down to 149.30, its now back up at 149.65. BoJ rate announcement comes in the early hours of tomorrow morning, no policy change is expected although a tweak to the YCC is still possible. We may also get to know the extent of intervention by Japan in the currency markets to prevent, or slow, yen depreciation.

Gold prices are back below $2000, not $1995 having been to nearly $2010 Friday when Israeli forces moved more into Gaza. The lack of escalation for now, plus some reasonably calming words from Iran who say they do not want to see the whole region at war, goes some way to soften demand for gold, and oil prices have also dropped with Brent now $88.00 and WTI $84, both around $5 off the highs since the Hamas attacks on 7th October.

Better leave it there for now or the day will be over before I’ve sent this. Have a great day.

- 09.00 German GDP

- 10.00 EU confidence

- 13.00 German HICP

- 13.00 ECBs de Guindos speaks

- 20.30 BoCs Macklem, Rogers speak

- 22.45 NZ building permits

- 23.30 Japan unemployment

- 23.50 Japan retail trade

- 01.30 China NBS manufacturing, non-manufacturing PMIs

- BoJ rate announcement

- 04.00 BoJ outlook report

- 07.00 German retail sales

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