Good morning
It was a fairly slow day in the markets yesterday up to the US close. GBPUSD traded broadly within a 1.2975 1.3015 range but did touch 1.3020 briefly at one stage. A strong US ISM PMI release led to a brief bout of afternoon USD buying before we reverted once again to USD selling into the London close. GBPUSD finished at 1.3015, EURUSD was higher as well, reaching 1.0920 which put GBPEUR at 1.1920.
BoC minutes came and went, still on the dovish side and nothing to expect there will be a change to that outlook any time soon. Inflation is expected to continue to decline and although the board considered a 25bps cut, there was stronger agreement that 50bps was more appropriate. USDCAD slipped on that late USD selling, reaching 1.3820 into the NY close.
NZ unemployment rate overnight was a slightly mixed bag, with the negative change in employment greater than expected, but the unemployment rate not quite as high as feared, coming in at 4.8%. NZD actually pushed higher on the release but the fact is the unemployment rate has increased and we’re still looking for at least a 50bps cut at the RBNZs meeting later this month, with some suggestions we could see a 75bps cut.
Of course, whatever happened yesterday is pretty irrelevant given the US election. Probably should have started with this. Trump looks like he’s won, only the second President to win two non-consecutive terms I’m told. It’s not officially over but seems as good as finished. Now we have to put up with some of his pretty terrible ad-libbed speeches and goodness knows what the US, and indeed the world, have in store.
USD is higher, GBPUSD is now 1.2870 having seen a low around 1.2850, EUR has suffered to a greater degree, reaching almost 1.0700 at one stage, now 1.0745. GBPEUR has traded back up to 1.2000, now 15 pips or so lower but well off the recent lows. USDJPY is 154.05 as I type. USDCAD is up at 1.3925. AUD has suffered, I presume on the notion that Trump ‘s victory could impact China, AUDNZD has been as low as 1.1000, now 1.1035.
Trump is already talking of tariffs, Reuters has reported that UK could be one country hit by such tariffs. I thought we had a special relationship? Mind you, Trump doesn’t like Labour much after he complained Labour members were helping out Harris in her election campaign. Starmer will have some work to do to regain favour for the UK.
Quite what Trump’s victory could mean for global security is up for debate. We knows he wants other countries to contribute more to NATO. I’d imagine he’ll want to broker a peace deal between Ukraine and Russia, he’d love a legacy like that, but I reckon he’d want Ukraine to agree to giving up huge swathes of land along with a commitment they will never join NATO at least. Ukraine might not go for that, which in turn could impact US/EU relations. Not sure what his opinion on Israel/Gaza is but again I’d imagine he’d love to be the guy who secured peace in the region. Can’t see it myself.
In Liverpool had a convincing win in Europe last night but Man City’s disappointing run of form continues, beaten heavily by Sporting CP, the manager of whom will soon be taking over at Man Utd. Today sees Arsenal in action at Inter Milan and Aston Villa away to Club Brugge. Mark’s Leeds Utd travel to Millwall which could put Leeds top on goal difference if they win and Sunderland, currently top of the Championship, lose to Preston NE. Meanwhile England’s cricket team take on West Indies in the third ODI this evening.
Tomorrow brings both the US and UK rate announcements to add to the volatility. Until then we have a limited calendar today but of course we’ll probably get the final US election results that confirms Trump as President.
- 09.00 EU composite PMI, PPI
- 14.00 ECBs Lagarde speaks
- 14.30 ECBs de Guindos speaks
- 15.00 CAD Ivey PMI
- 15.00 ECBs Nagel speaks
- 00.30 AUS trade balance
- 03.00 China trade balance
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