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  • richard evans

USD lower ahead of US inflation tomorrow

Good morning

We have a weaker US dollar this morning. A WSJ article suggests inflation is showing signs of easing, while Yellen has warned of potential for a recession as Fed target inflation with rate rises, saying they will need a bit luck as well as skill in managing the process. GBPUSD is up to 1.1690 despite weaker GDP numbers this morning and EURUSD to 1.0195. Both seem to be performing well enough but with GBPEUR down to 1.1470 it is clear that GBP is still having a tougher time of it.

ECB officials have been talking about inflation risks, Nagel saying further steps must follow and some are seeing rates up to 2%. It’s a light calendar today with just a couple of ECB speakers so more attention could be on them than we’d normally expect. EU have made some reasonable comments on customs checks according to the FT, and express hope that Truss will do a deal on post-Brexit trade arrangements in Northern Ireland.

The latest US inflation numbers will be out tomorrow although whether the reading will greatly affect the thinking for the size of the Fed rate move next week remains to be seen. For now, 75bps is still favourite, followed by a smaller rise of 50bps in Dec. A move of 50bps next week would likely see further USD weakness, but let’s not get ahead of ourselves.

So other than those ECB speakers, not a lot else on the calendar. Tomorrow morning sees UK unemployment, followed by US inflation tomorrow afternoon.

In the meantime, with GBPUSD over 250 points off last weeks lows, I’ll be looking at downside GBP ideas as I’m not convinced his is a lasting recovery.

I have to say I was disappointed that the FA had cancelled all football over the weekend, from the top tiers all the way down to grass roots football. It was supposed to be my teams first match of the season and I think many people were looking forward to showing their respect with a silence before the match. In the end, it was decided a greater sign of respect was not playing at all. I know the world does not revolve around football but I’m not sure cancelling matches is the best way for youngsters to show their respect.

As for Premier League, I was a little frustrated that they too had cancelled matches, particularly as the likes of rugby and cricket still took place. On reflection though, I wondered whether safety is an issue, with police being moved from matches to instead help out with crowds coming to celebrate the Queens life. Not sure, but I guess it pays to look at the bigger picture sometime.

There was football played across Europe and there were some intriguing events in the Juventus/Salernitana match. 2-1 to Salernitana with pretty much no time left on the clock, the final few minutes saw a penalty missed, a Juventus equaliser, another goal ruled out by VAR, and three sendings off, one of which was for the celebration of the goal that was ruled out. Exciting stuff.

The recent rain, warm weather, and lack of football over the weekend meant I was out mowing the lawn instead. I’d not done it for weeks, there had been little need, but suddenly it sprang back to life. I couldn’t believe who much it had grown and how much I cut. It does look a whole lot better now, neater and greener than it has done for months. Just need to keep on top of it now.

Finally, it was great to see the crowds that came to various palaces and castles to pay their respects to the Queen. It will be interesting to see how many people attend to view her coffin as she lies in state in the incredible Westminster Hall, with warnings of three mile queues and twelve hour waits, ahead of her funeral next Monday. 200,000 people queued to see the Queen Mother lie in state, I have a feeling numbers for the Queen could be considerably higher.

- 10.30 ECBs de Guindos speaks

- 13.00 ECBs Schnabel speaks

- 07.00 UK unemployment

- 07.00 German CPI, HICP

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