Good morning
Welcome to December.
The US dollar ended the week, and indeed the month, on a softer note with GBPUSD and EURUSD trading up to 1.2745 and 1.0585 respectively. Trump’s comments over the weekend, where he talked of harsh tariffs on BRICS nations who may look to replace USD as the reserve currency, sent USD higher, GBPUSD trading down to 1.2680 and EURUSD to 1.0495.
GBPEUR is currently 1.2080, not far off the November highs. Not a bad rally from GBP given the pair was around 1.1950 just last week. EUR under some pressure from the French political situation, with Barnier possibly poised to make further concessions to Le Pen’s demands in order to avoid a collapse of his government. However I see S&P have held France’s rating, you will recall Fitch lowered their outlook for France to negative in mid-October.
With UK rates still well above ECB rates, it is easy to see why GBPEUR is near those highs although Bloomberg have reported that Reeves is at risk of breaking her own fiscal rules and could be forced into a mini-budget after OBR delivers its economic update in Spring. A bit of a gloomy outlook.
USDJPY, which had been as low as 149.45 late last week, pushed up to 150.75 earlier this morning although as I type it is back at 150.20. GBPJPY is currently 190.60 having found support around 190.15/20, we’ve not been below 190.00 since the very start of October so well worth keeping an eye on the downside. Talk remains of a possible rate rise at the next BoJ meeting on 19th Dec.
This is an important couple of weeks for USD as we head into the year-end, with some major data and another FOMC rate decision coming up in the coming weeks. This week brings US employment numbers and ISM PMI’s. At the moment, expectations are for US nonfarm employment numbers to recover after last months dire +18k headline, the thinking is that this was impacted by weather and we could be in for a bounce to +180k or so. More on that nearer the time.
In Ukraine, there has been some suggestion that Zelensky could concede land that Russia has taken in order to agree a ceasefire. This could explain the latest push by Russia to take s much land as is possible. Whether either side will really find a suitable compromise remains to be seen, Putin won’t like Ukraine’s idea that NATO can provide security for the remainder of Ukraine, while he will also be a bit more confident in Russian abilities after the success in land grabs and the recent missile strikes.
In Syria, rebels have struck against the Assad regime with devastating efficiency and now control most of Aleppo. I don’t really understand whose side we are on here. I don’t think we like Assad, he’s friendly with the Russians I think but there is a suggestion that the rebels have connections with ISIS. Given the choice, I’d take Assad. It’s a complex situation.
In other news, Biden has granted his son a full and unconditional pardon for his tax evasion, gun and drug charges. Great to have parents in high places, but quite how that is allowed is really beyond me. Meanwhile Gregg Wallace fights back against his accusers. I don’t really know what to make of this, in a way I feel a bit sorry for him, it seems as though he has made some outdated and inappropriate comments that perhaps don’t deserve the attention they are getting, however my wife has never liked him and she is normally an excellent judge of character.
In sport, Spurs failed to recreate their form shown against Man City, managing just a draw with Fulham. Liverpool extend their lead at the top of the table with a win over Man City, Arsenal and Chelsea some nine points behind the leaders. Man Utd had a solid 4-0 victory over Everton, the first Premier League win for new manager Amorim. Mark always tells me off for failing to mention Leeds but I’ll keep quiet today given they lost 1-0 to Blackburn on Saturday. In cricket, England won the first test against New Zealand by eight wickets after a decent all-round performance. The next test begins Thursday.
It’s a little warmer now than it was a few days ago and it looks as though we’ll be away from zero for the next couple of weeks at least. Quite sunny out at the moment as well, at this rate a white Christmas will be out of the questions.
Have a great day
- 10.00 EU unemployment
- 14.30 CAD S&P manufacturing PMI
- 15.00 US manufacturing ISM
- 20.15 Feds Waller speaks
- 21.30 Feds Williams speaks
- 00.01 UK BRC retail sales
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