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  • richard evans

USD near recent lows as we await US inflation numbers

Good morning

A suggestion from Deutsche Bank that UK inflation may hit 2% by April has done nothing to stem GBP’s rise against USD. As I type, GBPUSD is testing the upper bound of recent rage around 1.2770 and were we to break above there we’d be in new territory for 2024, with an eye on the December high around 1.2825, which in turn marked a high since early August 2023.

The move really reflects a weaker US dollar rather than specific GBP strength. EURUSD is also higher, having tested up towards the 1.1000 area earlier this morning it now sits at 1.0975, leaving GBPEUR around 1.1630. US inflation numbers out this afternoon could be the catalyst for further USD losses if the data shows a continual decline, as is expected. Certainly, large USD gains are unlikely to be seen unless the inflation print is considerably away from expectations. So far I’ve really only seen UBS looking for a slightly stronger than consensus print.

The US SEC did finally approve the Bitcoin ETF which snt Bitcoin back up towards Tuesdays highs around $,47,750. It has backed off a bit since then, now at $46,300, but while this isn’t a proper endorsement of Bitcoin, it should offer support to the crypto world.

Ongoing easy monetary policy in Japan has helped their shares push to highs not seen for some time now. The Nikkei 225 traded above 35,000 this morning for the first time since 1990. JPY is still unable to make gains, USDJPY now close to one month highs around 145.50 despite the general USD weakness and despite the ongoing speculation over a move away from negative rates some time in 2024, perhaps as early as April.

I’m running a bit late so I’m going to leave it there for today. US data this afternoon will be the key, I’m tempted to look at some downside USD trades just in case we get a softer US inflation reading, a 1.1000 call expiring tomorrow costs 20 usd pips, or an overnight 1.2800 GBPSUD call costs about the same.

- 09.00 ECB economic bulletin

- 13.30 US CPI, initial jobless claims

- 19.00 US monthly budget statement

- 01.30 China CPI

- 03.00 China trade balance

- 07.00 UK GDP, industrial production


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