Good morning
A lot of talk over the weekend of a possible 50bps rate cut from the Fed this week has helped push USD lower against the majors. GBPUSD hit 1.3170, EURUSD 1.1115 but most attention is on USDJPY which has broken below 140.00 for the first time since July 2023, reaching a low of 139.75 so far. A 25bps cut still seems most likely but the fact that there are still decent arguments for a 50bps cut suggests this will be a close call. It’ll likely be a dovish meeting anyway, even if we see a 25bps cut we’d not be surprised if Powell offers a dovish message.
Bank of Canada’s Macklem has also raised the possibility of rates cuts larger than their usual 25bps, particularly if growth seems to be struggling. I strongly suspect the size of the Feds rate cut this week will have a bearing on the BoC’s decision. They have cut by 25bps at their last three meetings, the next meeting is not until 23rd October.
Other than the Fed rate announcement this Wednesday and our own BoE rate meeting Thursday, we have the BoJ rate announcement as well. We’re not looking for any change this time but there has been plenty of talk recently about the need for higher rates. South Africa will also be announcing rates on Thursday, as will Turkey.
In addition to the rate meetings, we have a pretty full calendar with CAD CPI and US retail sales tomorrow, UK and EU inflation Wednesday, NZD GDP and Aussie unemployment Wednesday night/Thursday morning and Japan inflation, UK and CAD retail sales on Friday. That’s enough to keep us going I think.
I’m pleased to say that the weather over the weekend was much better than I’d hoped, I even sat outside for a bit on Saturday after mowing the lawn, the warmth of the sun was very welcome. I know not everyone in Europe was quite as lucky, as devastating floods hit central and Eastern Europe including Poland, Czech Republic and Romania.
A family event yesterday meant I missed the Spurs Arsenal match, no bad thing given it ended with a disappointing 1-0 defeat although even the Arsenal fans I know said a draw would probably have been a fair result. Still, Spurs now have just four points from four matches which isn’t exactly the start I was hoping for.
I know this actually came out last week, but in case you didn’t see it there was something of mystery in the world last year that was only solved recently. A series of large, mysterious seismic shocks were recorded every ninety seconds for nine consecutive days, the reason for which remained unknown. Scientists have since discovered that a mountain collapsed in a fjord in Greenland, creating a tsunami some 200 metres high. With nowhere to go, the wave went back and forth inside the fjord for over a week. Amazing.
Meanwhile, over the pond, Trump seems to have survived another assassination attempt as he played golf, with secret service agents firing shots at a man hiding in bushes with a machine gun. The man fled but was later captured by police. Harris remains just ahead of Trump in the betting for the November election.
That’s all for now, back to the grindstone.
- 09.10 ECBs de Guindos speaks
- 13.00 ECBs Lane speaks
- 13.30 US NY empire state manufacturing index
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