Good morning
We had GBPUSD up to 1.2675 and EURUSD to almost 1.0520, helped in no small part by a shocking US consumer confidence number that came in at 98.3, well below consensus (102.5) and even further below the previous reading of 105.3. GBPUSD has actually tested that 1.2675 area several times since yesterday afternoon, each time it has failed and pulled back, this morning the pullback reached 1.2635 but as I type GBPUSD is 1.2655. EURUSD has also failed to break the recent highs around 1.0525 which in turn is just a few points off the 2024 highs we saw back on 27th Jan. GBPEUR holds around 1.2050.
Plenty of attention on weak incoming US data, with growing concern over next weeks US employment numbers which could be dented by the layoffs in US public workers. Quite when some of these layoffs appear in employment numbers isn’t exactly clear, tomorrows initial jobless claims numbers may reflect some but certainly not all of the job losses. Equity prices have been hit with Nasdaq down 1.35% yesterday, S&P500 lost around 0.5%. Attention turns to Nvidia who will release results this evening, their stock is down from a Feb high of $143.35 to $126.55.
USDJPY traded down to 148.60 on the weaker USD yesterday, pretty much matching the lows seen in early Dec, and traded again to that level overnight before recovering to the 149.40 region. Some talk that US have voiced unhappiness with the weak Yen and pressure could be growing for Japan to normalise interest rates, as such there is thinking that we could see USDJPY lower still, something in the low 146’s is a possible target. As always with Yen, timing is everything given the forward points remain very much against us which makes holding yen longs or long yen options rather expensive. A one month 146.00 USDJPY put costs around 90 yen pips.
USDCAD has pushed higher, bucking the weaker USD trend, now 1.4325, up from 1.4255 this time yesterday. Too early to be excited about profits in this but the markets seem to be catching the idea that next week Trump may well look to introduce the tariffs he began to implement earlier this month. USDMXN has remained interestingly stable mind you, now 20.45, bang in the middle of the recent 20.40-20.50 range, bar a couple of brief forays outside those levels.
It looks as though Ukraine are very close to signing a deal with US for its rare earth minerals, with talk Trump may meet Ukraine’s Zelensky later this week. Trump has mentioned the potential to lift sanctions on Russia, perhaps he is open to buying oil from Russia which would knock Canada’s oil sales to US. Trump also has his eye on copper imports, suggesting all US industries should buy US made copper. Tariffs on copper imports look likely.
In football, Chelsea reclaimed fourth spot in the premier league with a 4-0 win over Southampton. Crystal Palace beat Aston Villa and Brighton beat Bournemouth who are starting to lose grip on those European places in the league. Some big matches this evening, Spurs, desperate for another win host Man City, Arsenal travel to Notts Forest and Liverpool face Newcastle. Meanwhile England’s cricketers are taking on Afghanistan in a must-win match, England are bowling first to avoid elimination in the tournament. This won’t be as easy as you’d hope.
A pretty light calendar today, expect more dovish comments from BoEs Dhingra later, but attention must be on Trump, tariffs and Ukraine deals.
Have a great day
- 14.00 Trump speaks
- 15.00 US new home sales
- 16.30 BoEs Dhingra speaks
- 17.00 Feds Bostic speaks
- 18.00 Feds Barkin speaks
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