Back to work after the long weekend, looking ahead to Fed and BoE rate announcements

Good morning

I hope you all enjoyed the long weekend.  It did get surprisingly chilly but remained dry other than a couple of small showers.  Got plenty of work done in the garden and the dog enjoyed a couple of pleasant decent walks, I even played a bit of golf for the first time in about ten months which wasn’t quite as disastrous as I feared it could be.  And of course the VE day celebrations made for quite an impressive viewing, along with a flypast that included an old Lancaster bomber together with Typhoons and F35 jet fighters.  A good opportunity to celebrate Europe’s victory over Nazi Germany back in May 1945.  All in all a pretty decent bank holiday.

To round things off, Spurs didn’t lose, although to be fair they were playing the only team below them who isn’t being relegated.  Arsenal lost, which means there is a very outside chance that Spurs make the Champions League by winning the Europa League, and Arsenal miss out if they don’t finish in the top five.  OK, it would be exceptionally unlikely and if I’m honest not really something Arsenal would deserve having spent most of the season in the top two.  Would be a bit funny though!

Turning to the markets, it was a pretty quiet day yesterday, we did get a better than expected US ISM services PMI reading that helped the US dollar higher, GBOUSD fell from its afternoon high of 1.3335 to a low around 1.3270, EURUSD saw a similar drop from 1.1360 to just below 1.1300, both pairs now off those lows at 1.3310 and 1.1330 respectively.

AUD has benefitted since the Aussie elections saw Albanese re-elected as PM in something of a landslide victory.  His left of centre Labour party defeated the Liberals-National coalition as many see Albanese as a safer pair of hands to guide the country through the difficult Trump-tariff era.   GBPAUD traded down to 2.0485, its lowest level for nearly one month and well below the highs above 2.1600 seen after Trump’s ‘Liberation Day’ tariff talk.   

Quite a bit if trade talk over the weekend, China has called on Japan and South Korea to work together against US tariffs.  Trump suggested he may lower tariffs on China as they are looking for a deal, although China haven’t said anything that supports this claim.  Some suggestion Trump will meet with Canada’s Mark Carney today.  Meanwhile Ford has said Trump’s action are likely to cut their earnings by around $1.5bn this year, quite a damning outlook given Trump has argued that his tariffs can only help the US.  Even if he is right, it will take quite some time for any benefits to be felt.

Not a particularly busy calendar today but this week does bring both the Fed and BoE rate meetings on Wednesday and Thursday.  Fed are expected to remain on hold, while we are likely to see a cut of 25bps from BoE to take rates to 4.25%.

Inter Milan play Barcelona this evening in the second leg of their Champions League semi-final, after a thrilling first leg that ended 3-3.  Looking forward to that, hoping it’ll live up to expectations.  It’ll be Arsenal’s turn tomorrow evening as they try to overturn a one goal deficit to PSG, and then Spurs, Man Utd and Chelsea look to retain their leads in their own European semi-finals.

Have a great day…

-  09.00 EU Composite PMI

-  10.00 EU PPI

-  14.00 BoEs Breeden speaks

-  15.00 CAD Ivey PMI

-  22.00 RBNZ financial stability report

-  23.45 NZ employment