USD a touch weaker vs GBP, EUR in fairly quiet markets

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 recently. 

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

This will be until Sunday 31st when we change our clocks in the UK.

All remains reasonably quite in the currency world, the US dollar has retreated a little which puts GBPUSD now at 1.2650 and EURUSD at 1.0840, leaving GBPEUR around 1.1665.  USDJPY remains in the 151’s, now 151.30.  Some of this USD weakness could be down to a Mrgan Stanley report that suggests the US investment house is looking for four rate cut from the Fed this year, with 25bps cuts being seen in June, Sept, Nov and Dec.  That’s quite a call given the general feeling that we’ll see fewer cuts this year.  

We have heard some verbal intervention from Japan FinMin Suzuki who has repeated his position that they are watching levels closely will act to address disorderly currency moves.  As I said yesterday, this is either having little market impact, or is serving to contain further yen weakness.  Difficult to tell.

Chinese Yuan is offering some interest with USDCNY trading sharply lower yesterday morning but crept higher through the day and then too another leg higher this morning.  Now 7.2180, the key is how low China are setting their daily fix.  This morning it was down at 7.0943, no real bearing on the actual currency rate but a sign of PBoC stamping their authority on the currency markets.  USDCNH is running a few points higher than USDCNY, now 7.2470.

With a limited calendar today I can’t really find much insightful wisdom to share.  Thursday looks like being the bigger day with UK and US GDP, and then the US core PCE deflator on Friday.  Hopefully by then we’ll be tucking into our Easter Eggs. 

I was reading recently about the Avanti West Coast train company that has agreed an overtime rate of £600 for its drivers.  The Sunday Times suggests that this means some drivers could now earn over £100,000 each year.  The deal has come amid criticism over cancellations, delays and generally poor service.  I’m not sure whether this will encourage drivers to not go on strike, my guess is it won’t make the slightest bit of difference.  My eldest is looking for a new career, I’m wondering whether a train driver is a decent choice?  Money sounds OK but its surely got to be lonely and boring.

England take on Belgium this evening in a friendly, while Scotland take on Northern Ireland.  Wales will be fighting for Euro 2024 qualification against Poland this evening.  The friendly between Spain and Brazil may offer a good indication of how good, or otherwise, Englands performance against Brazil was at the weekend.

I won’t waste any more of your time this morning, have a great day and enjoy any morning sunshine you may have.  My forecasts suggests it’s turning very wet and windy this afternoon.

-  12.30 US durable goods

-  14.00 US consumer confidence

-  19.00 ECBs Lane speaks

-  00.30 AUS monthly CPI

Will we have a quiet week ahead of the long Easter weekend?

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 recently. 

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

This will be until Sunday 31st when we change our clocks in the UK.

Friday was a relative day of calm after the moves earlier in the week.  GBPUSD did test the 1.2580 area but held around 1.2600 for most of the day, and as I type it is not far off the level at 1.2615.  EURUSD tested down to 1.0800 late on Friday but found support there just as it had done a few times back in late February, now 1.0820.  GBPEUR  hadn’t really been below 1.1660 since late Jan but did drop below there on Thursday and has after a failed attempt to push higher it has generally stayed below that 1.1660 ever since, now just a few points lower at 1.1655.

USDJPY is stil above 151.00, now 151.30.  We have seen some fairly tough talk from Japan officials that has put the market on higher alert of intervention, with Dep FinMin Kanda saying they are in close communication with foreign counterparts, suggesting potential for coordinated action, which saying they are not ruling out any options.  The market may be on alert but we’ve not seen significant Yen buying. Still, perhaps the comments have slowed the Yen selling for now.

Not a huge amount of news to report from the currency world at the moment.  Fitch have revised UK’s outlook up from negative to stable on lower economic policy risks.  Feds Bostic has said he sees just one rate cut this year, down from his previous forecast of two cuts, with that one cut coming later than previously thought. 

So what did I get wrong this weekend?  Well first the weather which turned out to be colder than expected but certainly drier, with a load of lovely sunshine.  Grass was mown, a few other chores got done in the garden which I hadn’t expected to be able to do.  In F1, Max Verstappen didn’t win the Aussie GP, Carlos Sainz took the honours, all the more amazing given just over two weeks ago he had abdominal surgery.  They’re fit, these F1 drivers, if a bit mad.  He apparently reported that when racing after his surgery, everything inside seemed to move around a bit more.  Nice.

England lost to Brazil, a rather disappointing score given the upcoming Euros, I’m not sure either side fielded their strongest team but we had some decent players on the pitch.  Still, it was fairly close.  France, world cup finalists and second favourite for the Euros lost to Germany over the weekend, so perhaps its not so bad for England.  We’re hoping for a better display against Belgium tomorrow evening.  Wales will be taking on Poland tomorrow to see who will be competing in Euro 2024.

Of course the big news over the weekend was the terror attack that took place in Moscow that saw nearly 140 people lose their lives.  Despite IS claiming responsibility, Russia has accused Ukraine of involvement and of course we have the usual conspiracy theorists claiming CIA or Israel were behind the atrocity.  It seems US had warned Moscow of a potential threat, we may never know the truth but I’m thinking Euro 2024 and the Paris Olympics in the summer will face hefty security.  France have already moved their terror threat to the highest level.

We’ll hear from BoEs Mann later today, she changed her call for higher rates at the recent BoE meeting so it will be interesting to hear how close a decision that was for her.  I’d still expect her to err on the hawkish side mind you.  Otherwise it’s a fairly quiet calendar today and indeed for the early part of the week.  We’ll have UK and US GDP Thursday, and just as we in the UK are taking our long Easter weekend, our friends across the pond will be releasing the latest PCE numbers.   We’ll also have some reasonable Aussie data including CPI and retail sales through the week but I’m not seeing anything that I think will have significant market impact.  Famous last words perhaps? 

-  10.00 ECBs Lagarde speaks

-  12.25 Feds Bostic speaks

-  14.00 US new home sales

-  14.15 BoEs Mann speaks

-  14.30 Feds Cook speaks

-  00.30 AUS Westpac consumer confidence

GBP lower as BoE open door to lower rates

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 recently. 

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

This will be until Sunday 31st when we change our clocks in the UK.

I had said yesterday that while BoE were highly expected to keep rates unchanged, it was worth watching the voting patterns.  The results were quite surprising, not one member voted for a rate rise this time.  One looked for a rate cut, the remainder all voted to leave rates on hold.  This was taken as a dovish sign by the markets, and this feeling was added to by Bailey when he said the BoE does not need to wait until inflation hits 2% to start cutting rates, and pointed towards a rate cut in June.

GBP was sold off as you’d expect, GBPUSD traded down to 1.2650 having been up to 1.2800 in the morning, GBPEUR also fell, reaching 1.1655, the lowest level we’ve seen for two months.  By the evening GBP had also fallen in other crosses, with GBPAUD down to 1.9270 and GBPJPY  to 192.00.  UK retail sales this morning were actually not as bad as had been expected but this hasn’t prevented further losses for GBP, which has seen a low so far this morning of 1.2590 against USD and 1.1640 vs EUR, while GBPJPY is now around 190.50. 

AUD hasn’t performed well, highlighted by GBPAUD now being up at 1.9325 despite the ongoing GBP weakness.  AUD seems to be suffering from a bit of contagion of weakness in both China equity markets and CNY overnight , which has seen USDCNY jump from 7.2000 to 7.2300.

BoE dovishness aside, we had a couple of surprise rate announcements yesterday.  SNB cut rates 25bps to 1.5% as I was typing up yesterday’s report, and then Turkey came in with a whopping 5% rise to take their rates to 50%.   EURTRY fell from around 35.60 to near 34.60 before settling at 34.80.

USDJPY is holding above 151.00, now 151.30 having traded up to 151.80 overnight.  A lot of talk from Japanese officials about the level of Yen, they are watching closely and all that.  There does however seem to be more concern over possible intervention, there is some talk that they’ll get more vocal around the 152.00 area

Elsewhere, gold had hit new highs around $2,222/oz on Wednesday night but fell back to $2170 yesterday, and as I type it is $2165.  $2145 looks like a key area of support for the time being.

In sport, Wales beat Finland to set up a play-off against Poland on Tuesday for Euro 2024 qualification.  England are current favourites for the tournament, we certainly have a lot of talented players, but we’ve been disappointed on so many occasions I find it difficult to be confident.  England take on Brazil tomorrow evening in a friendly, which should be a decent match but is being a bit overshadowed by criticism of Nike’s rather too colourful interpretation of the St Georges flag on the England shirts. 

On the subject of football, not sure if you’ve seen the Harry Kane statue commissioned by Waltham Forest Council, but its worth a look.  Not quite on a par with the utterly ridiculous Cristiano Ronaldo one from a few years back, but I’m not sure it looks much like the ex-Spurs striker.  Its been sitting in storage for a few years after the council couldn’t work out where to put the statue.  Well, that’s what they say.  I think they have just been trying to hide it away hoping no one will see it.

Otherwise the early birds can catch the Aussie F1 race in the early hours of Sunday morning.  Think I’ll wait for the highlights, which probably won’t last long enough.  Verstappen is of course odds on favourite to win again. 

Weather doesn’t look so great but I think there will be time to get out and cut the grass again.  Really want to put a bit of weed and feed on as well but I seem to remember doing that a couple of years ago and although the weeds did in fact die off, the grass grew absurdly quickly for quite a while, which is really the last thing I need.   Still, shouldn’t complain, things could always be worse.  Tomorrow marks the fourth anniversary of the announcement by UK PM Johnson of the first Covid lockdown which ordered the vast majority of people to stay at home. 

A quieter day today perhaps, not much in the way of economic data today but plenty of central bank speakers on the calendar, and given the central banks are driving the markets at the moment we can’t ignore what they have to say.  Feds Powell this afternoon possibly the highlight of the day

Have a great weekend

-  09.00 ECBs Nagel speaks

-  09.00 German IFO

-  12.30 CAD retail sales

-  13.00 ECBs Nagel speaks

-  13.00 Feds Powell speaks

-  16.00 Feds Barr speaks

-  17.00 ECBs Lane speaks

-  20.00 Feds Bostic speaks