Good morning
For this week, US data releases will be one hour earlier at 12.30 or 14.00 london time due to the clock changes.
In addition, FX option expiries will be 14.00 london time, not the usual 15.00 london time.
US clocks change this weekend, we’ll be back to normal on Monday
I was out at the tail end of last week and missed a couple of rather interesting days. US GDP surprised to the downside last week, while ECB were perhaps not quite as dovish as many had expected. USD weakened, EUR tried to rally, with EURUSD pushing up from 1.1580 to almost 1.1700. The move was short-lived, USD gaining ground and pushing the pair down to 1.1540. Now sits 1.1575. Japanese equities pushed higher by over 2% as the ruling LDP party gained a majority which makes a stimulus plan more likely.
Plenty of news this morning, I’ll try to keep it brief. COP26 has come and gone with promises of better things, as always. We still have France unhappy about the UK issuing of fishing licences, saying France will prevent UK fisherman from working if the UK does not grant more licences to French boats. A letter from the French PM to EUs von der Leyen suggests UK should be punished for leaving the EU, to demonstrate how a country leaving the bloc is damaged. UK PM Johnson said such a request is not compatible with the terms and spirit of the withdrawal agreement. GBPUSD traded up to above 1.3800 late last week but USD gains Friday saw the pair trade as low as 1.3645 this morning, now a little off those lows at 1.3670. GBP lost a bit of ground against EUR post ECB, EURGBP now 0.8470 (GBPEUR 1.1810).
EU and US have reached an agreement to ease tariffs on steel and aluminium, resolving a trade dispute that has been in place since 2018. A portion of EU metals can now enter the US free of tariffs. Part of the agreement is to prevent metal from China and other countries being treated in the EU and then exported to the US. The UK, now outside the EU, doesn’t benefit from this particular agreement although they are noises from US that duties and quotas should be removed for ‘close allies’.
RBA rate meeting due early tomorrow morning, no policy changes are expected but there seems to be a feeling RBA will have to be a little more hawkish. RBA have recently changed its approach to yield curve control and we could see confirmation of this, together with an adjustment to its forward guidance. For now, AUDUSD is at 0.7500, AUDNZD 1.0455.
Could be quite a week ahead, with Fed and BoE rate meetings. Fed are expected to officially announce tapering, we will have to see if Powell talks down the possibility of rate rises in 2022. We have recently seen rate rise expectations brought forward by a few banks, the latest being Goldman Sachs who say the Fed may raise rates as soon as July next year in order to temper inflation, with a another rise to follow later in 2022.
No football scores to report, we had a rest this week. After the Man Utd/Spurs match I am no longer expecting a call from Old Trafford, instead I think I might well hear from White Hart Lane!
- 09.30 UK markit manufacturing PMI
- 13.30 CAD markit manufacturing PMI
- 13.45 US markit manufacturing PMI
- 14.00 US manufacturing ISM
- 22.45 NZ building permits
- 00.50 BoJ minutes
- 04.30 RBA rate announcement
- 06.50 RBAs Debelle speaks
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