Good morning
Welcome to April, welcome to Q2, welcome to some super lovely warm dry weather. If only!
Got to keep it brief today as I’m out and about pretty early this morning. The main news from the currency world is the firmer US dollar which did next to nothing until the US manufacturing ISM numbers came out yesterday, stronger than expected and crucially back above the 50 level for the first time since September 2022. US rate cut expectations are being pared back as a result, either in terms of timing or simply the number of cuts we are likely to see in 2024.
USD was higher across the board, GBPUSD traded down to 1.2540, EURUSD to 107.30 and USDJPY is now up to 151.80, prompting more jaw-boning from Japanese officials about how closely they are watching currency levels but has done little to support Yen for now. GBPEUR is back to 1.1700 having seen a range last week of 1.1640- 1.1720.
China once again fixed USDCNY below 7.1000 despite the pair trading to 7.2350 in the market, with USDCNH around 7.2640, the stronger USD offering no help to PBoC who would like to prevent further CNY depreciation, amid reports Chinese State banks were selling USDCNY in the market.
Gold made new highs yesterday, reaching $2,265/oz, some US$2,000 higher than the level Gordon Brown sold half of the UKs gold reserves back around the turn of the century. Part of those funds raised went into UKs Euro reserves which has appreciated around 30% or so since then. Still, with gold up nearly 1000% since then it makes the trade, which never looked good to start with, look really awful.
We’re back to normal times for US data and option expiries after the UK clock change at the weekend. It looks like being a busy week with german inflation today and US services ISM tomorrow, but the focus could well be on the US jobs data which starts today with the JOLTS, ADP tomorrow, challenger job cuts Thursday and then the main event Friday in the form of the nonfarm payrolls.
Have a great day whether you’re back in the office or one of the lucky ones taking some extended holidays
13.00 German HICP
15.00 US durable goods, factory orders, JOLTS job openings
17.00 Feds Williams, Mester speak
18.30 Feds Daly speaks