Good morning
A weaker ISM manufacturing PMI out of the US yesterday sent USD running for cover, with GBPUSD trading up to 1.2815 overnight and EURUSD to 1.0915. These were the highest levels we’ve seen in both since March and although we are now a little off those overnight highs we are still within a few pips of the March levels.
USDJPY was also impacted by the dollar sell-off, the pair trading down to 156.00 yesterday and this morning has taken another leg lower to 155.70. GBPJPY is back below 200, now 199.25. BoJs Ueda was speaking overnight, he mentioned there could be an upward adjustment to rates if inflation moves as expected. Japan FinMin Suzuki was also on the wires, saying the recent intervention had come as a result of speculative accounts weakening the Yen, and made it clear they will continue to act as necessary.
In UK politics, Nigel Farage has confirmed he will be standing for the Reform party in the general election. Some think this will split the Tory vote, while it does offer an alternative vote for disillusioned Tory voters I do wonder whether it prevents some votes going to Labour. Could the Tories and Reform create a coalition? Realistically I don’t think they’ll get anywhere near enough but I won’t be surprised if Farage and his merry men do better than expected. The first televised debate takes place this evening with Sunak and Starmer taking the stage.
England ground out an unspectacular win over Bosnia Herzegovina yesterday evening, not quite the show we rfeally wanted to see but that is just the sort of performance that will get us through the group stages in the upcoming Euros. England play again on Friday evening, this time against Iceland. England remain favourites to lift the trophy at around 3-1 with France close behind at 4-1. Croatia, the world cup semi-finalists just two years ago, look a reasonable outside bet at 50-1 although they are in a group with both Spain and Italy which makes their life somewhat difficult.
I’m out to some meetings through Wednesday and Thursday so there will be no reports over the next couple of days, I’ve added in calendars below. Not great timing I know given I’ll be missing the BoC and ECB rate announcements, along with US ISM services PMI and some second tier US jobs data, coming ahead of the US nonfarm payrolls Friday. We’ve already seen what a bit of weak US data can do to the USD so we’ll be watching the numbers closely, anything softer could weaken USD further, while a stronger reading could see some these USD losses pared back.
In terms of ECB and BoC, ECB seem set to cut rates 25bps. I do think the same applies to BoC although there is more uncertainty here with some banks thinking they will leave rate unchanged this time round.
Have a great few days. I should be available by phone, otherwise email if you do need anything while I’m out and about.
Tuesday
- 08.55 German unemployment
- 15.00 US JOLTS job openings
Wednesday
- 02.30 AUS GDP
- 02.45 China caixin services PMI
- 09.00 EU composite PMI
- 10.00 EU PPI
- 13.15 US ADP
- 14.45 BoC rate announcement
- 15.00 US services ISM
Thursday
- 02.30 AUS trade balance, building permits
- 10.00 EU retail sales
- 12.30 US challenger jobs
- 13.15 ECB rate announcement
- 13.30 US initial jobless claims
- 13.45 ECB press conference
- 15.00 CAD Ivey PMI
Friday
- 04.00 China trade balance
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