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 at the weekend.
In addition, FX option expiries will be 14.00 london time, not the usual 15.00 london time.
This will be until Sunday 30th when we change our clocks in the UK.
FOMC did leave rates unchanged yesterday as had been widely expected, although the markets were taken a little by surprise that the interest rate projections came in lower than they did last time, with a 50bps cut being eyed this year compared to no change from the last projections. Powell made it clear that the risks for the economy were now to the downside amid so much uncertainty, lower growth and higher inflation is never a good combination. Even so, Powell did play down the chances of a recession in the US.
Trump has since come out and said the Fed should be cutting rates to help ease the impact of tariffs that look certain to being on 2nd April, in fact Trump went so far as to say 2nd April will be ‘Liberation in America Day’.
The US dollar, which had pushed a little higher into the announcement, weakened with GBPUSD trading back up to break recent highs, reaching 1.3015 overnight, while EURUSD managed to hit 1.0915. GBP has clearly had the better of it, with GBPEUR trading up to 1.1935 from a low yesterday morning around 1.1880. UK employment numbers this morning were a touch better than expected.
Both GBPUSD and EURUSD are off those highs now, a bout of USD buying did see them trade to 1.2960 and 1.0865 this morning, both currently around 15 pips off those lows.
The lower USD saw gold make yet another record high, reaching almost $3,060 in the early hours of this morning, as geopolitical unrest and official demand continue to support prices.
Overnight we had NZ GDP and Aussie employment data. NZ GDP was a mixed bag, coming in better than expected but with hefty downside revisions to the previous readings. Aussie employment numbers were poor with a fall of 53,000 in jobs when a positive 30,000 or so had been expected, again we saw downside revisions to the previous months data. AUDNZD has been heading lower for the past week or so and did hit a five month lower around 1.0910 overnight, but is off its lows at 1.0955 as the markets try to figure out which country is in worse shape.
We have a Turkish central bank rate announcement today, rates are currently at 42.5%. TRY saw plenty of volatility yesterday as it was reported that Imamoglu, one of Erdogan’s key opponents, had been detained, triggering sharp falls in equity markets there. Concerns rise that Erdogan is stamping his authority in a pretty undemocratic way. USDTRY spiked to all-time highs at over 40.00, now back near 38.00. It had seemed for a while that Turkey’s reputation in the global arena had been improving. This certainly won’t help.
We also hear for the South African central bank today, there is mixed feeling here as to whether they keep rates on hold or but by 25bps. Unchanged rates seems marginally the more likely. Meanwhile SNB have cut rates by 25bps this morning, a move that was expected, even so EURCHF ticked up 50 pips or so to 0.9580.
Today the latest Band of England rate decision will be announced. Everyone is looking for unchanged rates, however we will be looking at the vote split as well the scale of cuts voted for by dissenters. You’ll remember that Mann surprised the markets by turning from hawk to super-dove at the last meeting, voting for a 50bps cut. I’ll be interested to see whether she follows suit this time. BoEs main dove, Dhingra, likely to vote for a cut, just remains to be seen what size. Overall, a 7-2 split in the voting looks most probable.
A 25bps cut in May is being touted and some are still looking for a total 75bps of cuts this year. We do have the UK spring budget next week where large spending cuts are likely to be announced given Reeves previously ruled out further tax rises.
In other news, Canada’s Carney has suggested Canada could join a new EU military project to decrease its reliance on the US. Carney has called the EU ‘reliable allies’ as he continues to speak of the disrespect Trump has shown for Canada. Ukraine’s Zelensky is due to address EU leaders today following his phone call with Trump yesterday, where Trump expressed interest in taking over Ukraine’s nuclear power facilities.
So, a pretty full calendar today but a decent chance it could come and go with minimal fuss. A brave call given the many issues facing the markets right now. I’m, hoping its quiet, the weather forecast suggests we could see temperatures of almost 20°c this afternoon, its been a long time since I felt that sort of warmth outdoors. I’ll be on my mobile….
Have a great day
- 08.30 SNB rate announcement
- 09.00 SNB press conference
- 09.00 ECB economic bulletin
- 11.00 CBRT rate announcement
- 12.00 ECBs Lane speaks
- 12.00 BoE rate announcement
- 12.30 US philly fed survey, initial jobless claims
- 13.00 SARB rate announcement
- 14.00 US existing home sales
- 18.05 BoCs Macklem speaks
- 21.45 NZ trade balance
- 23.50 Japan CPI
- 00.01 UK GfK consumer confidence
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