Good morning
It was another pretty quiet one in the FX world yesterday, US dollar was a touch higher but it was really a bit of EUR weakness that stood out, not helped by ongoing threats from Putin over Ukraine’s use of long range missiles supplied by US to attack targets inside Russia. There are also reports that UK-supplied missiles have been used by Ukraine to attack Russia for the first time. There is some thinking that the use of such missiles may have come too late, as Russia seems to be making advances along the front line in Ukraine.
EURUSD slipped back to the very low 1.05’s and also dropped against GBP as well, with GBPEUR moving up around 1.2025. GBPUSD traded to 1.2635, other GBP crosses were also mainly lower, GBPJPY was as low as 196.25, some 150 pips off yesterdays morning highs.
There wasn’t much else on offer yesterday, we heard from a few central bank officials but there wasn’t much that we’d not heard before. The calendar is a little busier today and again we have several central bank officials speaking including BoEs Mann who was the sole dissenter a the last meeting, preferring to keep rates unchanged.
For now, GBPUSD is 1.2640, EURUSD off the lows at 1.0535 which brings GBPEUR back to that 1.2000 level. GBPJPY is lower, now 195.55 after BoJs Ueda said that BoJ take exchange rate moves into account when deciding monetary policy, a hint perhaps that a weaker yen could push them to raise rates at their next meeting on Dec 18th/19th. The latest Japan inflation numbers are out tonight.
AUDNZD has broken out of its recent range, trading up to 1.1110. The move comes as Westpac push out their forecast for the first RBA rate cut to May 2025 from Feb 2025, while NZ chief economist has said NZ’s economic downturn is deeper and will last longer than previously expected.
The sabotage of two underwater cables in the Baltic Seas has caught my attention, with press reporting that a Chinese vessel may have deliberately broken the cables by dragging its anchors along the sea bed. A Danish Naval boat stopped and personnel boarded the boat but I’m not sure what happened after that. Difficult to point the finger as there were apparently a lot of vessels in the vicinity but this one just happened to be in the right place at the right time. Twice.
Turkish interest rates are expected to stay on hold at 50% at this mornings CBRT meeting. There has been a suggestion after recent comment from Erdogan that the central bank may come under political pressure to lower interest rates before time but it is quite likely his comments were misinterpreted and he really means that rates can fall when inflation is on a downward path. Meanwhile in South Africa, SARB are expected to cut rates 25bps to 7.75%. There have been a couple of suggestions we could actually see a 50bps cut but 25bps remains the consensus. Rates are expected to hit 7% my mid-2025.
The calendar looks full today but I’d say its mostly second-tier data, US philly fed survey possibly the highlight. Several central bank officials will be speaking through the day again. UK retail sales will be out in the early hours of tomorrow morning. They are not expected to make great reading.
I was out last night, went to the theatre to watch ‘The Lehman Trilogy’ which is the story of how Lehman Brothers was built by three brothers from nothing into a sprawling financial institution. It went into good detail of the history of Lehmans but failed to detail the events that really led up to its demise, save for the fact they made it very clear there were no ‘Lehmans’ left on the board when it collapsed. A good show, a bit long but cleverly done and overall worth a visit.
Finally, I have just ready the John Prescott has passed away. Not everyone’s favourite for sure, but he certainly was a man who knew what he stood for and was one of the great characters in politics.
Its another cold one today, I don’t think we’ve made it above zero yet this morning but I prefer this to the heavy rain that is forecast to be with us all day Saturday.
Have a great day,
- 11.00 CBRT rate announcement
- 13.00 SARB rate announcement
- 13.30 US philly fed survey, initial jobless claims
- 13.45 Feds Hammack speaks
- 14.00 BoEs Mann speaks
- 15.00 US existing home sales
- 15.00 EU consumer confidence
- 15.30 ECBs Lane, Elderson speak
- 17.25 Feds Goolsbee speaks
- 21.40 Feds Barr speaks
- 22.00 AUS manufacturing, services PMI
- 23.30 Japan CPI
- 00.01 UK GfK consumer confidence
- 07.00 UK retail sales
- 07.00 German GDP
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