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  • richard evans

US dollar softer with Fed officials in blackout period

Good morning

Every time I have written recently ‘EURUSD unable to break 1.10’, it has followed up later in the day with a move above 1.10. ECB officials have been pretty hawkish, with comments along the lines of ‘its not the time to pause’ or ‘a few more rate rises will be needed’. Fed officials on the other hand are still in the blackout period ahead of the next FOMC meeting it would seem that the market is considering a more dovish outcome this time around and US dollar has suffered as a result. GBPUSD pushed steadily higher yesterday , eventually topping out around 1.2505 overnight, now 1.2465, while EURUSD managed to get to 1.1065 overnight, only in the last few minutes has it fallen back to 1.1030. GBPEUR 1.1300.

There seem to be a lot of reports of job losses over the past few weeks, particularly from the US. The likes of Twitter and Amazon have announced culls, now its Disney’s turn who are looking to shed some 7,000 jobs, while the US regional banks such as First Republic are also talking of decent-sized staffing cuts. I now wish I’d kept a record of all those I have read about, I think the actual numbers would be quite worrying.

BoJs Ueda has been speaking again ahead of his first BoJ policy meeting. He did say that BoJ would consider raising rates if appropriate but for now no changes are expected and I’d imagine he will not want to do or say anything that will create unnecessary volatility.

AUD is a bit lower ahead of its CPI release due overnight, GBPAUD trading above 1.85700 as I type, which I think marks a high since Feb 2022. GBPNZD also making highs up at 2.0250, we were briefly above that level back in Oct 2022.

Gold is not benefitting from this recent spell of a weaker USD. It trades now at $1990/oz, some $60/oz lower than recent highs, I’m yet to see any decent explanation as to why this may be. Bitcoin is also failing to capitalise on the USD weakness, that sits now at $27250, over 10% lower than a couple of weeks ago.

I have an old school friend staying with us from New Zealand. I took him to London for the dawn ANZAC ceremony which started at 5am, so we were in the car around 4am. It was freezing! I thought the days of frost on the windscreen were behind us now we’re nearly in May but I appear to have been mistaken. I don’t often drive into London these days. Even at that early hour with limited traffic the roads were quite busy, not helped by the fact the A40 was closed and 30mph speed limits that seem to stretch further and further out of London.

Driving with open(ish) roads at 30mph is very difficult and with average speed cameras in abundance there is no chance of the odd bust of speed to relieve the boredom. Yes, I know, safety first and all that, but I do look back fondly on the days we used to be able to do 70mph into London almost until we hit (not literally) Baker Street.

- 14.00 US housing prices

- 15.00 US consumer confidence, new home sales

- 23.45 NZ trade balance

- 02.30 AUS CPI

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