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USD up on higher US PPI inflation numbers

Good morning


USD could have gone one of two ways yesterday after weak retail sales suggested a softer USD but higher than expected PPI was dollar positive.  The market took the side of the PPI, which came in at 0.6% against an expected 0.3%, with core up to 0.3%.  This saw GBPUSD fall from a morning high of 1.2820 down to 1.2730, EURUSD move from 1.0945 to 1.0875.  The prospect of Fed keeping rates on hold for longer is looking more likely, next week sees the latest ‘dot-plot’ from the Fed which will give us an updated idea of their views. 


USDJPY took advantage of the stronger dollar, trading up to 148.65.  Japan are waiting for comments regarding the wage increase agreements which many think will be the catalyst for an eventual BoJ rate increase.  Interesting to see USDJPY moving higher when Nikkei moves lower.  For a long time the two moved pretty much in tandem, but the correlation seems to have dried up.


ECB officials meanwhile continue to point to June for their first rate cut, Knot said he was pencilling June in, while de Guindos said there would be enough data by then to make a decision.  The comments didn’t have a great deal of impact given a cut in June is pretty much expected.  Stournas has gone so far as to say the war against inflation is over and although growth in the EU is low, they are not facing a recession. 


Pretty much four years ago today we went into Covid lockdown.  Longstanding readers of my ‘column’ will know that as early as January 2020 I was watching Covid closely with the expectation it would turn into something very bad.  Unfortunately it was one of those rare occasions I was right.  The world changed dramatically for a while.  Here we are four years later, still feeling some of the effects of the pandemic, both physical and financial, but in general the world is getting back to normal with trains, planes, pubs and restaurants full to overflowing sometimes. 


The SpaceX Starship had what Musk has said was a very successful launch despite it breaking up on re-entry.  It had far exceeded the parameters it met in its previous two flights, and six more launches are planned for this year which may see the flaws ironed out. 


We have a decent weekend of sport ahead of us.  Cheltenham continues, I don’t think my name selections were quite as successful yesterday.  Today I’m looking at Nurburgring in the 1.30, only because of my enjoyment in motor racing, then fastorslow in the 3.30 for similar reasons.  Finally, I see we have ‘Russian Ruler’ in the 5.30.  Now that particular person has done little for anyone in recent years and I can’t imagine him doing us any favours now, but surely it’s time he did something worthwhile for us.  Speaking of which, Russians will be out in the droves over the weekend to vote in the Russian elections.  This looks like being a close call.  Close, as in whether Putin gets 95 or 99% of the vote!  He’s in for another term, that’s for sure, even his opposite number in the elections sounds like he’s voting for Putin.  Farcical. 


Sunak might want to take a leaf out of Putin’s book.  There are press reports suggesting Sunak won’t even make it to the next election as PM.  He’s losing the support of the Tories and they will be keen to make sure they have an electable team ahead of the general election later this year.  Quite how they’ll build that with some of the people they have isn’t clear.  Anyway we’ll save UK politics for another day.


Back to sport, we have the six nations deciders.  England take on France, and if Scotland can beat Ireland, a win for England would see them lift the tournament trophy.  That certainly isn;’t expected, the clever money is still on Ireland.  England are 35-1 which looks good if you think Scotland can beat Ireland and that England will beat France.   


Otherwise, we have the FA Cup quarter finals, Man Utd v Liverpool looks like the tastiest tie, while in the Premier League Spurs could get into the top four with a win over Fulham tomorrow.  Fingers crossed. 


Enjoy the weekend as and when it comes.  The weather this week hasn’t been quite as bad as the forecast had previously suggested and I’m hoping this continues into the weekend.  The grass needs a cut, that’s for sure. 


Next week is a busy one, with BoJ, Fed and RBA rate announcements, plus  UK, EU and CAD inflation, NZ GDP, Aussie employment and Japan trade data.   Get some rest in while you can.  Perhaps take on the 1,000th NYT wordle game.  Can’t believe its been going on that long.  No spoilers, I’ve not done it yet.


-  09.30 UK consumer inflation expectation

-  10.00 ECBs Nagel speaks

-  12.30 US NY empire state manufacturing survey

-  14.00 US Michigan sentiment survey

-  14.30 ECBs Lane speaks


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