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US dollar remains weak but no June rate cut from Fed expected

Good morning

 

Welcome back, I hope you had a terrific long weekend.  Mine involved a bit of gardening, a bit golf, a bit of watching sport, a fair bit of family stuff and of course a couple of glasses of wine.  A perfect bank holiday weekend.  I also managed to repair a cordless drill that I’d had trouble with.  A quick look on YouTube suggested I should take it apart, jiggle it around and put it back together.  I did, and it worked.  I felt like something of a mechanic even though in reality it was more like an adult lego set.  Still, it would have gone in the bin had I not given it a go.  Quite an accomplishment in my world.

 

I do have to congratulate Southampton on their rise to the Premier League after beating Mark’s Leeds over the weekend.  After Leeds semi-final performance they looked like almost certain winners but they were unable to produce the same kind of form this time and will have to wait another year for their return to the top flight.  Still, Southampton are a whole lot closer to Mark now so could be time to adopt them as a second club.  Probably too late to get a season ticket though.

 

Congratulations also to Man Utd who surprised may by beating local rivals Man City in the FA cup final.  I did watch it, I thought it was a pretty entertaining match and I never mind seeing a team other than Man City win something. 

 

Anyway, back to work.  I always find it a bit of a struggle to wrote something after even the shortest break, but I’ll see what I can come up with.

 

The US dollar weakened a bit further against GBP and EUR yesterday.  GBPUSD had been down to 1.2675 on Friday morning after the retail sales numbers, it is now up at 1.2770, just 10 pips off the highs.  EURUSD also rose, from a Friday low around 1.0805 to hit 1.0880, pretty much where it is now.  This leaves GBPEUR at 1.1745, a touch off yesterdays highs of 1.1765.  The yen remains weak.  USDJPY has held well in the mid-high 156’s, which means GBPJPY has broken above 200 for the first time since 2008, during the global financial crisis, having been above 151.00 in July 2007.  Japan FinMin Suzuki has said again he is concerned about the negative aspects of a weak yen, but drew the line at confirming whether they did intervene in the currency markets in late April/early May.

 

Some hope that UK inflation will show more signs of softening, with BRC shop prices slowing to 0.6% in the first week of May, the lowest level since late 2021.  The energy price cap will come lower in July and BoEs Broadbent said he felt inflation was ‘getting there’, adding that monetary easing would be needed in the coming months.  Of course, the UK election is dominating the headlines, we’ve already heard of pledges and promises by various politicians. 

 

It’s a rather odd time for Sunak to announce his thoughts on military service, perhaps this is the start of the head line that I think the Tories will need to take if they are to have any chance in this election.  Still, for many people, politics has become somewhat farcical and so far removed from reality.  The fact the Liz Truss is allowed to take £115,000 annual ex-PM ‘salary’ after a disastrous 45 days at the helm really goes a long way to prove how absurd the whole set-up has become.

 

China have warned US about getting involved in maritime disputes between China and its neighbours.  The problem is, left untouched, the Chinese will simply take over any land or islands they like the look of, and there is nothing that anyone can do about it.  Meanwhile, some are likening the build-up of China forces around Taiwan to those of the Russian forces on the Ukrainian borders back in late 2021/early 2022. 

 

We don’t have the busiest economic calendar today but it does pick up through the week, with German inflation tomorrow, US GDP Thursday and then EU inflation and US core PCE on Friday.  I’m out and about a bit this week, including my annual golf weekend that begins Friday.  Will it stay dry?  Unlikely, I don’t think I’ll need to pack the suntan lotion either. 

 

 

-  14.00 US house price index

-  14.15 ECBs Knot speaks

-  14.55 Feds Kashkari speaks

-  15.00 US consumer confidence

-  18.00 Feds Daly speaks

-  18.05 Feds Cook speaks

-  02.30 AUS CPI

 

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