Good morning
A good day for the US dollar yesterday, pushing higher against both GBP and USD. It was all pretty stable through the morning but come the afternoon we saw some persistent USD buying that took GBPUSD and EURUSD down from 1.2720 to 1.2620 and 1.0535 to 1.0460, helped along the way by better than expected US ISM numbers. Some focus on US interest rates with markets 50/50 on a Dec cut and only three cuts being priced in for 2025, although the usually more hawkish Fed member Waller did say yesterday he’d support a Dec cut barring any data surprises. .
By the London close some of those USD gains had been reversed and this morning we’ve seen further USD selling which takes GBPUSD back up to 1.2675 and EURUSD to 1.0505, perhaps people are paying more attention to those comments from Waller. GBPEUR is up at 1.2065, it had reached 1.2090 yesterday and with UK rates path continually higher than ECB rates, and with the French political chaos, the pair is likely to be supported.
Yen bucked that strong USD trend though, USDJPY traded lower to 149.25 which meant GBPJPY slipped through the support I mentioned yesterday and down to a low of 188.50. We’ve since seen a reversal, USDJPY is just back above 150 and with GBP recovering, GBPJPY is now 190.35. There was some talk that GPIF, the Japanese government pension investment fund, may aim to push more holding towards domestic which should ultimately result in buying Yen against overseas currencies. Nothing is always that straightforward though, the increased domestic stock allocations are not confirmed although Nikkei did rally 2% yesterday, perhaps led by the allocation thinking.
In France, Barnier used special constitutional powers to push through his budget despite the opposition from both left and right wings. A confidence vote is likely to take place as early as Wednesday. Perhaps that unchanged stable rating by S&P was a bit premature.
Turkish inflation, released this morning, was lower than last month but at 47.10% is still higher than had been expected and really quite a frightening number. TRY continues to weaken with USDTRY up at 34.74, although EURTRY and GBPTRY are off their September highs, now 36.50 and 44.00 respectively.
In other news, Police in Australia have seized a huge haul of cocaine, some 2.3 tonnes with a street value of nearly £400m. It came from a boat that had broken down off the coast of Queensland. That is quite an incredible sum of money, the drug dealers behind it will not be at all happy. I wonder how much of a dent that puts in their operation or is it considered just a risk of the trade?
Speaking of large sums of money, Elon Musk won’t be happy that a judge has ruled against his US$56bn pay award from Tesla. The award had been approved by both the board and the shareholders back in June after a Delaware court had stopped the payment back, however it seems to have made its way back to court where the judge upheld her original decision. It is a ridiculous amount of money but I have to agree with Musk that shareholders should control company voting, not judges.
Today we have the US JOLTS job data, the first employment number of the week that also brings ADP tomorrow, Challenger Thursday and the highlight, the nonfarms on Friday. These numbers are fairly crucial to the Dec FOMC decision so plenty of market moving potential although as much as we look at the secondary data, it is really the nonfarms that is the key.
More Fed officials speaking today, the Feds blackout period before the 18th Dec FOMC decision begins this weekend so they’ll be trying to get their bit in before that starts. Aussie GDP overnight is expected to show a smidge of growth, for the record GBPAUD is currently 1.9515.
That’s all for now folks, have a great day
- 15.00 US JOLTS job openings
- 16.00 RBNZ Gov Orr speaks
- 17.35 Feds Kugler speaks
- 20.45 Feds Goolsbee speaks
- 00.30 AUD GDP
- 01.45 China caixin services PMI
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