Quiet start to the week, but plenty of key data to come

Good morning

It was, as we had expected, a fairly quiet day in the currency markets yesterday, the US holiday giving our friends across the pond a nice long weekend.  Equities were mixed both in Europe and in Asia, the US dollar slightly higher across the board as the market comes round to thinking that perhaps US rate cut expectations for this year are a little overdone.

AUD has lost a little ground ahead of tonights Aussie Q2 GDP release.  There is some thinking that lower iron ore prices are responsible for the AUD weakness, iron ore futures slipped over 4% in Asian trade.  AUD also under pressure from AUDJPY selling which took the pair down from near 100 to 98.40.  AUDNZD broadly unchanged around 1.0885 as NZD seems to track its neighbour.  GBPAUD now 1.9470, GBPNZD 2.1185.

Highlight for today will be the latest US ISM PMI numbers this afternoon, while ECBs Nagel will be speaking after the London close.  Aussie GDP overnight is expected to come in around the 1% mark.  BoEs Breeden speaks this afternoon, as far as I recall she is pretty middle of the road so I don’t expect anything too out of the ordinary from her.

In other news, Turkey inflation came in just below 52% this morning, having been as high as almost 75% in May this year.   Turkey as officially asked to join the BRICS group of nations, although I’m not sure what they would then call the group, they could really do with another member with a vowel at the start of the country name to make it easier to find a new acronym. 

I have little else to offer this morning, I always struggle on my return from holiday, so will leave you with this reasonably short report for now.   

Have a great day. 

-  13.45 BoEs Breeden speaks

-  14.30 CAD S&P manufacturing PMI

-  15.00 US manufacturing ISM

-  17.45 ECBs Nagel speaks

-  02.30 AUS GDP

-  02.45 China caixin services PMI

Holidays are over, back to reality

Good morning

I’m back in the office after two weeks of travelling Europe with friends which took in some of the sights of Croatia, Italy and Spain.  We stayed in some incredible places, feel free to ask if you’re looking for holiday accommodation as I may just have a couple of gems up my sleeve.  One town in Croatia, Cavtat, which I have to admit I had never heard of, is only a couple of miles from the airport, and has a calm, peaceful feel, ideal for a short weekend break, particularly in the apartment we had which had a rooftop infinity pool overlooking the bay, the sea and Dubrovnik in the distance. 

Anyway, to the markets and what I’ve missed while I’ve been away.  The overriding theme seems to be one of USD weakness, triggered by heightened US rate cut expectations.  A cut in September is pretty much a given, the question remains of whether we see a 25bps or 50bps cut.  Powell and his colleagues have made it clear that while they are of course watching inflation, it is the labour market they are perhaps more concerned about.  As such, this weeks employment numbers will be closely watched ahead of the 18th Sept rate meeting, with JOLTS, ADP and the main event, nonfarms payrolls. 

Other than the employment numbers, we’ll also have the latest ISM PMIs from the US this week.  It is actually a holiday in the US today so we may have a quiet afternoon but it is likely to get busier as the week goes on. 

In other news, the German right wing AfD party saw success in the regional elections over the weekend, the first right-win victory in a state parliament election since world war II.  They also came very close in the Saxony, where they achieved 30.6% of the vote, just behind CDU with 31.9%.  As we saw in France recently, the other parties who failed to score well are looking to pool resources to prevent as AfD victory in the Brandenburg elections in three weeks time.

 China and Philippines are still at odds in the South China Seas with both sides blaming each other for a collision between two vessels.  It might be unfair but I’m thinking China were probably to blame.  In Israel there is pressure on the government to find a peace deal that would see hostages returned after the bodies of six Israeli hostages were discovered in a tunnel in South Gaza.  In Ukraine, Russia are reported to be making gains, while Ukraine still hold parts of Russia.  The key issue still seems to be whether Ukraine can use Western weapons to strike deep into Russia itself. 

In sport, Man City and Liverpool have started the season with three wins out of three.  Spurs are stuck in mid-table after losing to Newcastle over the weekend, not exactly the start we were hoping for.  While I was away we went to see Barcelona play a league match against Real Valladolid.  Barcelona strolled away with a 7-0 win, great for the home fans but as a footballing spectacle and of course a good experience for us, but it wasn’t close to the excitement and pace of the Premier league. 

I’m going to leave it there for now.  It’s difficult to get back into the swing of things after a couple of weeks off and I run the risk of just wittering on about nothing important.  I’ll leave you with the currency levels now compared to the day I left.  The weaker US dollar is clear to see.

GBPUSD 1.3140 (1.2875), EURUSUD 1.1075 (1.0980), USDJPY 146.45 (149.00), GBPEUR 1.18765 (1.1725), GBPJPY 192.45 (191.80), GBPAUD 1.9375 (1.9420), GBPNZD 2.1085 (2.1400), GBPCAD 1.7725 (1.7670), XAUUSD 2,500 (2,450).

Have a great day

-  09.00 German manufacturing PMI

-  00.01 UK BRC retail sales

USD weaker as calm returns to the markets. I'm away now for a couple of weeks, see you in September...

Good morning

Better than expected US retail sales data sent USD a touch higher yesterday afternoon, GBPUSD trading from 1.2865 to 1.2800 and EURUSD from 1.1010 to 1.0950.  USDJPY was a clear winner with the pair trading up from 147.20 to 149.20 on the release.  EURUSD has since struggled to recover despite a weaker USD overnight, EURUS now 1.0985.  However GBPUSD recouped all losses by the London close and better UK retail sales this morning, including an upward revision to the previous months data, has helped push GBPUSD to a high around 1.2885.  USDJPY is holding around 149.00, which puts GBPJPY around 192.00

With GBP pushing higher and EUR struggling, GBPEUR is now back above 1.1700, actually reaching 1.1730 after the UK data this morning, a pretty decent move given that just over one week ago we were below 1.1600.  In fact, it was only last week that we saw the massive equity market sell-off which included a 12% drop in the Nikkei and global equities suffering major losses.  This seems long forgotten.  We are not at all-time highs, but we are back up to the sort of levels we reached before the rout.  Even USDJPY is back up at 149.00 The panic is over, for now at least.

On the subject of panic, I mentioned the mpox outbreak just yesterday, and this morning I read that a case has been found in Sweden, the first outside Africa.  UK are said to be making plans to educate doctors and help them recognise cases quickly to ensure speedy diagnosis and treatment of infection. 

In the US, Kamala Harris is now favourite to win the November election, overtaking Trump in the betting.  I have to say I have been unimpressed with Harris so far, and I have to repeat myself that out of 330 million or so people the US must surely be able to find better candidates.

The new Premier League season begins today with Man Utd taking on Fulham this evening.  The highlight of the weekend could be Chelsea v Man City on Sunday.  Spurs play newly promoted Leicester on Monday evening.  Difficult to bet against Man City but I have a sneaky feeling that they may struggle this season and that the likes of Chelsea and Man Utd could be back in the running.  Chelsea at over 3-1 look reasonable value.

As I mentioned yesterday, I’m away for the next couple of weeks on a European tour.  Mark is of course on hand to help with anything that may arise in my absence.  I am rather hoping the markets will continue to show calm while I am away, it’ll be September when I’m back and I am sure all talk then will be about whether the ECB, Fed and BoE will be cutting rates in their meetings on 12th, 18th and 19th Sept respectively.

For the record, current currency levels are shown below, I’ll be interested to see how much movement we have while I’m away:

GBPUSD 1.2875, EURUSUD 1.0980, USDJPY 149.00, GBPEUR 1.1725, GBPJPY 191.80, GBPAUD 1.9420, GBPNZD 2.1400, GBPCAD 1.7670, XAUUSD 2,450.

Until then, have a great couple of weeks and enjoy what is left of the summer.  It’ll be hot where I’m going, although the forecast suggests the UK will be in for some sunshine and mid-20°c temperatures.  That’s not too unreasonable.  Right, off to pack and attack the list of chores my wife has created for me to get done before we leave.  I’ll need a holiday after getting all that done!

-  13.30 US housing starts, building permits

-  15.00 US Michigan sentiment survey

-  18.25 Feds Goolsbee speaks