Good morning
Yesterdays US JOLTS job report came out on the weaker side of expectations which helped push USD lower. This particular release isn’t really an indicator for the nonfarms which are still expected to show a decent rise on Friday, but perhaps gives us an idea that some softening in the US labour market can be expected.
So, GBPUSD is back to where it was around a week ago, in the high 1.24s, while EURUSD is back where it was just last Friday, around 1.0390. USDCAD has seen a rollercoaster over the past week, from 1.4340 or so all the way up to almost 1.4800, and now back down again to the low 1.43s. It’s almost as though Trump’s recent tariff announcements didn’t take place at all. Worth remembering though that, for the time being at least, tariffs are only paused rather than cancelled, so what will happen in a months time remains to be seen.
Trump isn’t just about tariffs. He is now talking about taking over Gaza as well as Greenland and even possibly Canada. On Gaza, he said he’d resettle Palestinians in parts of Egypt and Jordan, something neither country is happy with, let alone the Palestinians themselves. An interesting comment from Tump, that’s for sure. Elsewhere, Trump and Xi won’t be talking as planned, that was cancelled after China imposed retaliatory tariffs on certain US products. Hong Kong and China markets reopened after a week or so holiday, no surprise that equities there were marked lower.
What I do find interesting is that US postal service has suspended parcels from China and Hong Kong until further notice. I’m not sure of the details here but I know I’d be pretty unhappy if I’d ordered and paid for goods that were then blocked. I presume the recipents will eventually have to pay some sort of fee to have their packages delivered.
We’ve still not heard what tariffs Trump will impose on the EU, if any. While Mexico and Canada have fallen into line with Trump’s demand pretty easily on order to postpone tariffs, it may be harder for the EU to do so as and when they come. With EURUSD now looking at 1.0400, and US rate cuts looking less likely, I do wonder whether we should be looking at downside EURUSD trade ideas, just in case. I’ll do some investigation, let me know if you’re interested.
In Japan, talk of more rate rises this year, combined with the generally softer USD, has sent USDJPY down to almost 153.00, the lowest level since mid-Dec. GBPJPY is 191.55 as I type. And overnight, NZ jobs data didn’t make great reading, with the unemployment rate ticking up to a four year high of 5.1% although NZD is actually off the lows against GBP at 2.2010, as is their neighbour AUD which is currently hovering around the 1.9900 area.
The UK is facing a tough time right now. It is reported that the OBR may downgrade UK growth forecasts from 1.1% to close to 0.7% for 2024, and from 2% to 1.3% for 2025. Not great reading for Reeves who has been warned she’ll most likely have to cut spending or raise taxes. Also not making good reading is this idea we may pay Mauritius some £18bn over the Chagos Islands, almost double the initial number, although Starmer has denied this is the case. Starmer has been under a great deal of pressure recently, his meeting with his oral coach over lockdown is in focus at the moment but there are plenty of other issues the general public are not happy with.
Football this evening sees Newcastle take on Arsenal in the second leg of the League Cup semi-final. Newcastle have a 2-0 lead from the first leg but Arsenal have been in fine form recently and will be desperate to overturn that deficit. Spurs take on Liverpool in the next semi-final tomorrow. Meanwhile Leeds Utd, who as you know I have something of an obligation to mention, could extend their lead at the top of the Championship with a win over Coventry this evening.
So, US PMI numbers and a few Fed officials are the main event today, we do also have the US ADP employment change data this afternoon which is the one that has previously been talked about as a nonfarm indicator although I’m not sure its ever been very good at that. Tomorrow we’ll have the BoE rate announcement where it is likely we’ll see a 25bps cut.
As I finish this, GBPUSD has popped just above 1.2500, EURUSD just above 1.0400, leaving GBPEUR around 1.2020.
Have a great day…
- 09.00 EU composite PMI
- 10.00 EU PPI
- 13.15 US ADP employment
- 14.00 ECBs Lane speaks
- 14.45 US S&P composite PMI
- 15.00 US ISM services PMI
- 18.00 Feds Goolsbee speaks
- 20.00 Feds Bowman speaks
- 00.30 AUS trade balance
- 00.30 Feds Jefferson speaks
Comments