Yen higher on BoJ comments, market awaits US PCE

Good morning

Wednesday was yet another day of trading within narrow ranges,  GBPUSD lifted off its morning lows around 1.2625 to trade within a few points of 1.2665, where we are now, while EURUSD pushed up from 1.0800 to sit around the 1.0835 area.  EURUSD is actually a few points higher than that now, placing GBPEUR at 1.1680, just a touch lower than this time yesterday but certainly nothing to get excited about.  Feds officials all followed the usual theme of ‘not quite ready yet for rate cuts but hopefully later this year’.  ECB officials have been beating a similar drum, warning of the risks of cutting too early. 

There was a move overnight in USDJPY which traded lower from 150.70 to 149.70, pretty much where we are right now.  The move was down to some hawkish talk from BoJ’s Takata who said higher wage rises are leading to inflation finally coming within range of target and BoJ will need to look for  an exit from stimulus including ending negative rates, although drew the line at talking about exactly when that may happen.   

I am afraid I also have to report another decent shift higher in Bitcoin, which hit almost $64,000, meaning even those who bought it back in late 2021 at the highs and held onto it are back in the money, or at least very close.  I guess now we’re now going to have to put up with them shouting about how good they are at trading.  Mind you, anyone who managed to buy at this years lows would be up around 40% now.  The move comes as money flows into Bitcoin ETFs, with BlackRock seeing an inflow of $520m in just one day.

Today’s calendar sees the US PCE deflator which we know is closely watched by the Fed and will come under even more scrutiny after the recent shift higher in CPI.  A MoM reading of 0.4% and an annual rate of 2.8% are expected.  We also hear from several Fed officials although I will be very surprised if they move away from the consistent message their colleagues have been spreading, unless of course we get a real shock from the PCE.   Before all that we’ll have german inflation ahead of the key EU inflation release tomorrow.

So it’s the end of February and tomorrow we’ll be welcoming in March.  A leap year this year, I went through a stage when I was younger of being scared of 29th Feb, as it was the day women could ask men to marry them.  For some reason I feared that I’d be caught by someone, looking back I have to wonder what on earth I was thinking.

On the subject of not thinking, I travelled into the City yesterday, always a pleasure, except I have to ask when did having phone calls on the train, or watching videos, using the loudspeaker function, become acceptable.  Now I know for some people that any phone call on a train was deemed annoying, but it never worried me.  But to play music aloud, or to have both sides of a telephone call blaring out in public just isn’t on.  Its far worse than the high-pitched sound we used to hear from cheap Walkman headphones.  This is just rude and I’d like it to stop.  I don’t think this is me just being old. 

Finally, commiserations to Leeds who lost to a last minute goal from Chelsea which saw them exit the FA cup.  Man Utd overcame Nottingham Forest, Brighton lost to Wolves and Liverpool beat Southampton.  Quarter finals will be on 16th March.

Have a good day.  The rain that had been forecast has arrived, its coming down pretty hard at the moment and I think we can look forward to more of the same tomorrow.  It might stop in aq week or so!

-  08.55 German unemployment

-  13.00 German HICP

-  13.30 US PCE, personal income/spending, initial jobless claims

-  13.30 CAD GDP

-  14.45 US Chicago PMI

-  15.00 US pending home sales

-  15.50 Feds Bostic speaks

-  16.00 Feds Goolsbee speaks

-  18.15 Feds Mester speaks

-  18.30 US government funding vote

-  23.30 Japan unemployment

-  00.00 RBNZs Orr speaks

-  01.00 China NBS manufacturing PMI

-  01.45 China caixin manufacturing PMI

NZD lower as RBNZ veer away from further rate rises

Good morning

It was another slow day in the currency markets yesterday, even weaker than expected US durable goods and consumer confidence data couldn’t push the US dollar low enough for GBPUSD to break above 1.2700 and now, after a few failed attempts to push higher, the pair has slipped back to 1.2650.  Similarly, EURUSD struggled to get above 1.0860 and now sits lower at 1.0820, while GBPEUR is 1.1690.

There was some excitement overnight in the form of the RBNZ rate announcement.  They did keep rates unchanged at 5.5% but put a less hawkish spin on things, which sent NZD lower, NZDUSD dropped from 0.6175 to 0.6100, AUDNZD moved up to 1.0685 and GBPNZD to 2.0755, both these are currently around 20 pips off those highs but still above pre-RBNZ levels.  There had been some (ANZ) looking for a rate rise this time, they won’t be happy.  AUDNZD was the least affected, largely down to the fact AUD was also under pressure after lower than expected monthly CPI data.

US GDP is the key release on the calendar today, an annualised rate of 3.3% is expected.  This is followed by several Fed officials, I’d be surprised if they offered anything other than the usual rate cuts at some point but not right now’.  We do hear from BoEs Mann this afternoon, she’s usually hawkish but has recently suggested she might move away from calling for additional rate rises. 

Bitcoin has pushed higher, trading around $59,000 having started the week nearer $50,000 and having been as low as $38,500 in January.  As you know I am no fan of the crypto world, call me old fashioned but I really do not see any reason for its use unless for less than fully legal purposes.  Self-fulfilling seems to describe it. Mind you I’ll loathe it even more when it hits $500,000 and I don’t own any of it.  I just cannot bring myself to get involved, a decision I may possibly one day regret.

In other news, I see Apple are winding down their plans to build an electric car, moving some staff to an AI project.  Electric car firms have seen slowing demand recently, Tesla recently said 2024 would see slower sales growth than 2023, Ford and GM have postponed plans to expand EV production and other car firms are altering their future plans, with some who previously said they will move away from combustion cars completely now changing their mind.  Cost seems to be a key factor, electric vehicles are expensive, although you do get comparatively good performance for your money.  With Chinese car makers seemingly able to sell decent electric vehicles at lower prices, Western firms struggle to keep up. 

Man City looked strong as they beat Luton last night in the FA cup. Mark’s Leeds take on Chelsea this evening in their FA cup tie as they hope to get into the quarter finals. 

That’s all for now.  After a slow start to the week, the rest could be a bit busier, with some heavy weight US economic data on the calendar, including PCE deflator tomorrow and ISM manufacturing PMIs Friday.  Enjoy the day, the weather has been dry here for a few days but the forecast suggests that’ll change, with rain on the way until we are well into March.  Lovely.  

-  10.00 EU consumer confidence

-  13.30 US GDP, PCE

-  16.30 BoEs Mann speaks

-  18.00 Feds Bostic speaks

-  18.15 Feds Collins speaks

-  18.45 Feds Williams speaks

-  23.50 Japan retail trade

-  00.30 AUS retail sales

Can EUR gain amid push back on rate cut timings

Good morning

Well I thought yesterday would be a quiet day in the currency markets but I didn’t expect it to be quite so quiet.  GBPUSD did try to push towards 1.2700 but failed to break up and slipped back to 1.2680 or so, just a few pips from current levels.  EUR gained a little ground, and I mean little, as a mildly hawkish Lagarde reaffirmed ECBs commitment to get inflation lower which could limit the chances of an early rate cut, while ECBs Stournaras said he sees no ECB rate cut until June.  EURUSD now 1.0855, GBPEUR 1.1690.

USDJPY slipped back a little overnight, trading from a high around 150.80 to current levels of 150.35 as their inflation numbers came in a touch higher than expected, even though they showed a slowing from last month.  A move away from negative rates to zero could be seen as early as April, but the feeling is that even if this were to happen it would likely be the only BoJ rate rise in 2024.

There is still some hope of a ceasefire in Gaza, with Biden suggesting a deal could be reached by Monday, although there is still a significant gap between the demands of the two sides.   Meanwhile Biden is also hoping for his own government to find an agreement to ward off yet another potential government shutdown later this week.  He’ll be meeting congressional leaders later today.

US durable goods and consumer confidence are released this afternoon but the chances are we’ll see another quiet session.  Overnight could get more interesting with Aussie inflation numbers, followed by RBNZ rate announcement.  They are widely expected to keep rates unchanged, although worth remembering that earlier this month ANZ called for a 25bps in both February and April, so there could be a hawkish tilt to the meeting.  NZD has actually been sold off a little ahead of the meeting, I am aware of people looking to get long NZD were we to see a post-RBNZ dip.  For the record, NZDUSD, AUDNZD and GBPZND are 0.6170, 1.0615 and 2.0560 respectively. 

I’m having trouble finding any other exciting news, but I have to say I am quite intrigued about a new TV program that aired last night called The Jury.  I didn’t actually watch it, I’ve recorded it, but it is a re-enactment of a real murder trial with actors playing the key roles.  The jurors know it is a fake trial but the aim is to see if they will come to the same verdict.  The twist?  Unbeknown to the jury, there is a second jury watching exactly the same thing, having their own discussions and making their own verdict.  Will they reach the same verdict?  And what are the implications for the judicial system if they don’t?  This has the potential to be quite gripping.  I hope it lives up to the hype.

That’s all for today, I guess we’ll have to sit and wait to see if GBPUSD can break above 1.2700 and whether EUR can extend its small gains against both USD and GBP. 

-  13.30 US durable goods orders

-  13.40 BoEs Ramsden speaks

-  14.00 US house price index

-  14.05 Feds Barr speaks

-  15.00 US consumer confidence

-  00.30 AUS monthly CPI

-  01.00 RBNZ rate announcement

-  02.00 RBNZ press conference