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  • richard evans

US dollar fails to gain from hawkish comments

Good morning

Another pretty unremarkable day in the currency markets yesterday, the host of Fed speakers said nothing new so we know pretty much where we stand with US rates, that is they’ll be creeping higher, most likely with 25bps rises in both March and May, Fed remaining data-dependent. Feds Waller seemed to sum up current thinking, saying efforts are beginning to pay off but still a long way to go, rates could be higher for longer.

ECBs Kazaks says ECB rates must reach highly restrictive levels and will remain there for some time. A 50bps rise in march is expected and Kazaks sees no reason yet why rates increases should pause or slow. He does say that at some point it is reasonable to expect the pace and size of rate rises to slow, but we’re not there yet.

Despite the somewhat hawkish comments from Fed and ECB, it is GBP that seems to be coming out on top, with GBPUSD currently 1.2125 and GBPEUR 1.1275, both up a little from this time yesterday. EURUSD holding in the mid-1.07s.

Zelensky was in London yesterday, asking the West for modern fighter jets to help fend off Russia. There will surely come a point where Putin says ‘enough is enough, you have now supplied so many weapons we regard you as now being fully involved’. Quite what that brings I don’t know, but it’s unlikely to be good. That’s not to say I am against arming Ukraine, they certainly need help.

The head of NATO has warned that China are increasing their spying capabilities on the West, using cyber systems, satellites and now balloons. Mind you anyone who thinks they don’t spy on us, and we don’t spy on them, must be living in a different world.

We could be in for another quiet day despite german inflation numbers coming out. Of more interest could be comments from ECB officials later. Early tomorrow morning we have UK GDP and industrial production, not expected to look great of course but GBP continues to look pretty resilient.

I don’t see a great deal of good news to report so I’ll leave it there, although worth mentioning Google’s share price fall that took some $100billion off its value after Bard, its latest AI bot, got a question wrong in an advert designed to show how clever it was. Good work!

- 10.00 EU economic growth forecasts

- 13.00 German HICP

- 13.30 US initial jobless claims

- 17.00 ECBs Nagel speaks

- 18.00 ECBs de Guindos speaks

- 00.30 AUS RBA monetary policy statement

- 01.30 China CPI

- 07.00 UK GDP, industrial production

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