Gaza's fragile peace is broken as Israel launches fresh attacks

Good morning

US data releases will be one hour earlier at 12.30 or 14.00 london time due to the US clock changes that took place at the weekend. 

In addition, FX option expiries will be 14.00 london time, not the usual 15.00 london time.

This will be until Sunday 30th when we change our clocks in the UK.

Poor US retail sales data yesterday gave trades a reason to start the week selling US dollars.  GBPUSD traded to a high of 1.2995 and EURUSD hit 1.0930 in the afternoon.  Equities were generally higher which was perhaps a slight mystery given the increased likelihood of a US slowdown but I guess they have come low enough that the odd correction is only reasonable.

Despite the weaker USD move running out of steam yesterday, as I type we are not only retesting but breaking those lows, GBPUSD now ticking above 1.3000 and EURUSD to 1.0940.  GBPEUR is 1.1875, just a shade lower than this time yesterday. 

Israel have struck targets in Gaza once again as a near two months of some sort of peace is broken after suggestions that Hamas was preparing an attack similar to that of 7th October.  Meanwhile there are reports that an Iranian ship has been sunk in the Red Sea by US forces, the suggestion being it had been helping Houthis target US vessels.  Trump has made it clear that Iran will face dire consequences if Houthi attacks on US military and shipping in the Red Sea doesn’t stop.  The lower USD move is a theme that has been running for some time now so it shouldn’t be a surprise.  However we tend to see a stronger USD when there is increased talk of war or conflict, we are not seeing that for the time being. 

Gold prices have made new highs around $3,025/oz, perhaps the looming threat of a new phase in the Gaza conflict is having an impact although I strongly suspect data will soon show that China has been continuing with their purchases in recent weeks and months.  I’m thinking there is more upside to be seen here.

Trump is said to be speaking to Putin today about peace in Ukraine and how best Ukraine’s assets can be divided to suit everyone, possibly other than Ukraine.  There is even talk Trump will officially recognise Russia’s control over Crimea.  Trump has also said he could well be hosting China’s Xi in Washington soon, those comments come as China conduct more military drills around Taiwan.

Canada’s Carney has been visiting Europe to strengthen ties.  Both Canada and Europe have been hit with Trump tariffs and it shouldn’t be a surprise that affected nations look to join together in order to combat the trade threat from the US.  Carney had strong words for Trump, saying they will not speak until disrespectful comments about Canada stop.  Carney has acknowledged that there is a limit to how much Canada can match US tariffs given the US economy is so much larger.  He is waiting to see what Trump does on 2nd April before any response is made.  On the subject of Canada, the latest Canadian inflation numbers are released later today, markets looking for a slight uptick from last month.  USDCAD continues to trade lower, currently 1.4275,

Overnight we’ll have the BoJ rate meeting.  There has been plenty of talk about a possible rate rise but it is not expected to be announced at this meeting.  Indeed, despite USD being generally lower, USDJPY is over 300 pips higher than last weeks lows, just a whisker away from 150.00. 

In other news, China’s electric car firm, BYD, have unveiled a new charging system much faster than Tesla’s superchargers.  The system could give a car 250 miles of range in five minutes, which would make stops no longer than refilling with petrol and as such make electric vehicles all the more practical.   The news won’t help Musks Tesla which has seen stock prices trade down from around $490 in December to a low last week of around $218.  A lot of that is coming, apparently, from political backlash against Musk and there is even talk he may be forced to resign from the board. 

I like electric cars and think with larger range and quicker charging they offer everything one needs to travel in style and comfort.  Remember we are still in the very early days of electric vehicle technology. However I’d love to know what the limits are for the national grid.  If everyone had superfast charging cars, would the grid be able to cope?  This is all on top of the high energy demands for data centres and AI infrastructure.  Wind power won’t suffice here.  That idea of net zero is looking less and less likely.

Finally, congratulations to Rory McIlroy for winning the Players Championship yesterday, on St Patricks Day of all days.  He has struggled to win a tournament for some time now, the Players isn’t a major but it will set him up well for the Masters which takes place at Augusta next month.

Have a great day…

-  10.00 German ZEW

-  12.30 US housing starts

-  12.30 CAD CPI

-  13.15 US industrial production

-  23.50 Japan trade

-  03.00 BoJ rate announcement

-  06.30 BoJ press conference

Apologies for missed or delayed reports

Good morning

US data releases will be one hour earlier at 12.30 or 14.00 london time due to the US clock changes that took place at the weekend. 

In addition, FX option expiries will be 14.00 london time, not the usual 15.00 london time.

This will be until Sunday 30th when we change our clocks in the UK.

Firstly, apologies to the many of you who did not receive your email reports towards the end of last week.  My antivirus software seemed to have developed a habit of not allowing me to do my own work, but it seems to have been resolved this morning so hopefully now it is business as usual. 

Fortunately, after a busy start to the week, GBPUSD settled down in the latter part of the week, happy to sit between 1.2920 and 1.2960 for most of the time.  Not quite the same for other majors, EURUSD moved from a high early in the week of 1.0945 to 1.0820, before making another move back above 1.0900.  As I type it is 1.0905, and with GBPUSD having made a bit of ground this morning, now up at 1.2970, GBPEUR is 1.1890.

Trumps tariffs and possible resulting trade wars have had a profound effect on the markets, including sending global equity prices lower, although Friday did see some improvement, I fear which may be short-lived and no doubt we’ll see continued volatility.

A lot of talk of possible peace in Ukraine, Trump suggests he’ll be talking to Putin tomorrow, the two will likely plan to carve up Ukraine, something Ukraine has never wanted but I am sorry to say now seems rather inevitable.  The key I guess will be whether Russia is then prevented from further invasions, be it on Ukraine or any other country.

In sport, England came close to winning the six nations after a decisive win over Wales, but France got the four tries needed against Scotland to give them the bonus point to provide them with a pne point lead in the table, indeed they’d have won it on points difference anyway I believe so Scotland really had to win for England to claim the title.  England will come away quite happy althgouh it is fair to say their final matches were certainly against the easier of the opposition. 

In football, many congratulations to Newcastle for their victory over Liverpool in the League cup yesterday.  Let’s not talk much about Spurs.  It isn’t looking good there right now and I cannot help but feel that unless Spurs manage to somehow raise the Europa League trophy, Ange’s job is likely to be over.  With Spurs not firing on all cylinders, indeed hardly firing on any cylinders at all, a Europa Cup win is a nice idea but not particularly realistic I fear.  Meanwhile, Forest continue their incredible season with a win over Ipswich, Forest third in the table with a five point advantage over fourth placed Chelsea. 

Elsewhere, the F1 season began with a pretty exciting race in Australia that saw seven different constructors take the top eight places, something that bodes well for the season ahead.  The Chinese grand prix is up next, starting this coming Friday.

Todays calendar isn’t long but US retail sales are always of interest, perhaps more so now as we look for signs of any slowdown in domestic demand.  We do have a bust week ahead, the highlights being the Fed and BoE rate announcements on Wednesday and Thursday respectively.  We also have EU, Canadian and Japan inflation, BoJ, SNB and PBoC rate meetings, NZ GDP, and UK and Aussie employment numbers.  Never a dull moment.

I’ll leave it there fort now given how late you’ll be receiving this, but I’m hopeful full service will be resumed tomorrow morning.

Have a great day…

-  12.30 US retail sales, NY empire state manufacturing

-  14.00 ECBs Lagarde speaks

Will Putin go along with US/Ukraine ceasefire suggestions?

Good morning

US data releases will be one hour earlier at 12.30 or 14.00 london time due to the US clock changes that took place at the weekend. 

In addition, FX option expiries will be 14.00 london time, not the usual 15.00 london time.

This will be until Sunday 30th when we change our clocks in the UK.

UC CPI inflation came in lower than expectations yesterday which sent USD lower although the move was short-lived   GBPUSD reached a high of almost 1.2990 while EURUSD climbed to 1.0930.  Both pairs are off those highs now, EUR has certainly come off worse, perhaps due to tough trade talk from both US and EU, perhaps also due to Putin’s reported reluctance to agree to the ceasefire that has been discussed by US and Ukraine.  Indeed, Putin has stepped up efforts to take back control of the Kursk region that Ukraine has held for some months.  A US team are heading to Moscow for talks, Trump has threatened Russia with serious consequences should they not play ball, but as I have said before, the days of US being able to tell other nations what to do have passed.  I think we’ll see Russia stepping up attacks on Ukraine before any lasting peace deal is agreed.

With Euro dropping fast than GBP, GBPEUR is well off recent lows which came in around 1.1835, now trading at 1.1915.  France have lowered their 2025 growth forecast from 0.9% to 0.7%, they also see inflation coming in weaker than expected, partly due to lower regulated electricity prices.  Interesting given I have just received a message from British Gas confirming a near 10% price increase for my gas and electricity.  Thanks for that.   

The relative GBP strength comes just about two weeks before OBR publishes their latest forecast for the UK economy.  They are highly likely to confirm Chancellor Reeves will miss her key fiscal targets by well over £1bn, a number that would reportedly be almost doubled if more current borrowing costs were used.  Expect Reeves to announce spending cuts in an effort to plug the gap.

BoC cut rates by 25bps to 2.75% yesterday, a move that had been widely expected.  This is the seventh cut in the current cycle.  BoC said they are concerned about slowing domestic demand in Q1 and also worry that the trade conflict could disrupt the weakened economy further and also impact the jobs market.  Overall, it’s a pretty dismal outlook but Macklem was clear that the Bank will need to tread carefully with regards to further rate cuts as they will likely need to find a balance between lower growth and the risk of rising inflation.  USDCAD trades now at 1.4385, tariff talk still the driving factor here for the time being.

I mentioned the North Sea tanker collision earlier this week, questioning whether the collision was an accident or deliberate.  I think I have read somewhere that most of the crew of the Portuguese registered Solong were Russian.  Including the captain who has since been arrested.   Naval experts have said it is a mystery how the Solong managed to hit the Stena Immaculate given the sophisticated equipment on board ships these days.  Curious stuff.

In sport, Arsenal and Aston Villa are both through to the quarter finals of the Champions League.  Arsenal have been drawn against Real Madrid, Villa will face PSG.  At this stage of the tournament there are no easy matches, there are eight strong teams remaining, but no one wants to face Real Madrid.  There was some controversy in the Real v Atletico match yesterday.  It went to a penalty shoot out that Real won after Atletico had one of their penalties disallowed due to the ball being hit twice by Alvarez when taking his spot kick.  He slipped as he was taking it and VAR said he kicked the ball onto his standing foot before it hit the back of the net.  The rule is correct but I have seen the video and I didn’t think it conclusive.

Spurs are in action in the Europa League this evening as they attempt to overturn a one goal deficit from the first leg.  Spurs are favourites at the bookies to both win and qualify. I wish I shared their optimism.  Man Utd, struggling like Spurs in the league this season, are also playing in the Europa League this evening against Real Sociedad, scores level after the first leg.  Chelsea will be hoping to retain their one goal advantage in the Europa Conference League match this evening against Copenhagen.

US PPI inflation is the main economic release out today, markets are expecting a slight drop from last month as we saw with CPI yesterday.  UK GDP is out early tomorrow morning but trade tariffs are still very much the main talking points for the time being.

Have a great day…

-  09.50 ECBs de Guindos speaks

-  10.00 EU industrial production

-  12.30 US PPI, initial jobless claims

-  21.30 NZ business PMI

-  07.00 UK GDP

-  07.00 German HICP