Is a ceasefire a ceasefire if both sides are shooting at each other?

Good morning

USD weakened just a little yesterday which saw GBPUSD trade a smidge over 1.3400, we are now 20 pips or so below there so hardly anything to get excited about.  Similarly EURUSD saw a high around 1.1575 yesterday, now sits 1.1550, which keeps GBPEUR just a few points off 1.1600.   USDJPY is creeping higher, now 160.35, which leaves GBPJPY up at 214.75.  AUD and NZD are a touch weaker against GBP, with GBPAUD at its highest level for almost two months at 1.9070, GBPNZD is 2.3020.

Risk sentiment doesn’t seem too affected news that US has launched new attacks against Iran in retaliation for the shooting down of a US helicopter by an Iranian drone.  Trump says the strikes were proportional and in self-defence, Iran then launched drones and missiles at US bases in the region but there are no reports of damage or harm to personnel  I’m not sure if this means the ceasefire is holding or not but Trump’s ongoing assertion that a peace deal is not far away continues to look a little optimistic.  Oil prices are actually a little lower, helped by reports that more ships had successfully and safely passed through the Strait of Hormuz.

Main events today on an otherwise sparse economic calendar will be US inflation and Canada’s rate announcement.  For the US CPI, the headline is expected to rise from 3.8% to 4.2%, with core also likely to tick higher from 2.8% to 2.9%.  Anything around this or higher will be another reason for Fed to raise rates next week.   For BoC, they will be holding rates at 2.25%, the tone of Macklem’s comments will be of more interest for future rate moves. 

Aussie inflation expectations are due out tonight, this comes a couple of weeks after Aussie CPI surprised to the downside, which in turn came a week after softer than expected Aussie employment numbers.  We’ve seen AUD weaken since those releases, GBPAUD is up nearly 550 pips from mid-May levels, AUDNZD is down 200 pips and AUDUSD down 250 pips or so.  A weak number overnight could see further AUD losses although short term direction is probably more linked to geopolitical news. 

Elon Musk’s SpaceX IPO closes today.  They are looking to raise $75bn and the suggestion is the offer is hugely oversubscribed, with reports of some $250bn in applications from investors.  Quite what this means for allocations remains to be seen.  The share price offering values the company at around $1.8trn which is pretty wild given last year’s revenue of $18.7bn and an operating loss of $4.2bn.

England’s footballers will play their final friendly this evening against Costa Rica, just one day before the world cup tournament begins.  I’m not expecting much excitement from the game, it’s likely to be more of a training and acclimatising affair.  Mexico will take on South Africa in the opening match of the finals tomorrow evening, we’ll have to wait a week for England’s first match which is against Croatia next Wednesday.

Have a great day…

-  13.30 US CPI

-  14.45 BoC rate announcement

-  15.30 BoC press conference

-  02.00 AUS consumer inflation expectations