Good morning
Fridays US nonfarm payrolls numbers sent the markets on a bit of a wild ride, the USD first weakening on the lower than expected headline, before reacting to the combinations of the revision higher to the previous data, improved unemployment rate and higher average earnings figures. USD ended the week on a more positive note and US rate cuts for 2025 are looking less and less likely.
Overnight we saw USD initially trade higher again, news of Trump’s new tariffs on steel and aluminium imports pushing up demand for the US dollar although the impact was short-lived. GBPUSD had traded down to a low around 1.2360, now 1.2405, EURUSD also gapped lower to around 1.0280, now 1.0310. GBP has held gains against EUR, with GBPEUR now 1.2030, almost 100 pips off last weeks low.
USDJPY is currently 152.05 having traded briefly below 151.00 late last week. Worth noting that USDJPY did not really benefit from the post-nonfarm USD rally, indeed the pair dropped on the open as safe haven Yen buying seemed to be back in favour, despite Japan being one of the countries that will be impacted by the steel tariffs. GBPJPY currently 188.60 after seeing a low on the open around 187.05, the lowest level since Sept last year.
It’s a limited calendar for the start of the week, Monday and Tuesday is really made up central bank officials speaking, including Lagarde today and Feds Powell’s testimony before Congress tomorrow. Wednesday brings the highlight of the week, the US CPI inflation report, Thursday sees UK GDP and US PPI, while Friday brings EU GDP and US retail sales. Not the busiest week perhaps but still plenty to keep us on our toes.
In other news, Trump obviously making headlines with the ongoing tariff talk. He also claims to have spoken to Putin although Russia haven’t confirmed this. He seems confident he’ll bring a ceasefire to the Ukraine/Russia conflict although I’m not sure how close peace is in reality. Ukraine would likely have to give up ground already lost to the Russians, something they won’t be happy to do but are probably increasingly prepared for. Any peace plan would need to include assurances of no further Russian invasion of Ukraine or indeed other countries in the region.
I am watching the USAID story with interest. USAID dishes out billions of dollars of overseas aid each year, some of which is spent on vital health programmes, but there have been examples of payments that do seem to be less essential, such as $8m to teach Sri Lankan journalists how to avoid binary-gendered language and $2.5m on electric vehicles in Vietnam. I’m sure I read that USAID also funded some media outlets, our own BBC being one of them. There is talk of large-scale fraud, Trump has previously said the aid agency is a criminal organisation. We all know that aid from the richer nations in the world is important for less developed countries but there seems no doubt a lot of people have got rich off some of the payments.
In sport, Spurs were dumped out of the FA cup although they weren’t quite as bad as they have been in some matches, particularly considering they were up against a decent Aston Villa side. Pressure still on the Spurs manager but my gut feel is they will keep him and give him a chance once the 12 or so players out through injury are back in action. Speaking of being dumped out of the cup, Liverpool lost to Plymouth Argyle, makes Spurs loss look far more palatable.
In rugby, England as last managed a decent win, beating France in a rather frantic finish at Twickenham. France were left ruing some unforced handling errors, while England will now be thinking we’ve played to two toughest teams and if France could beat Ireland we’re surely in with a shout. A bit too much to hope but I think its possible.
Last night saw the US Superbowl, with Philly Eagles coming out on top. There will be many sore heads in the US today, never quite sure why they have one of their biggest sporting events late on a Sunday night, I’m sure there must be a good reason for it but it seems pretty absurd to me.
Other than sort, the weekend was a bit of a washout so I used my time wisely and finished season four of Slow Horses. I’d thoroughly recommend it, if you’ve not seen it. The performance of Gary Oldman as Jackson Lamb is absolutely superb. I think a fifth series is being filmed, can’t wait. Now looking for a new box set to get stuck into. Recommendations greatly received.
That’s about all for today. Lagarde speaks this afternoon, but I think we could be in for a bit of a nothing day as markets await US inflation numbers Wednesday, although we must keep an eye on Trump tariff/trade comments as we know there is more to come from him at some point.
Have a great day
- 14.00 ECBs Lagarde speaks
- 23.30 AUS Westpac consumer confidence
- 00.01 UK BRC retail sales
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