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.
I’d suggested we might see a quiet day yesterday and indeed that was broadly the case. GBPUSD saw fairly tight ranges between 1.2935 and 1.2960 through most of the day, this morning that range has been broken to the downside after the UK inflation release showed prices had dropped by more than expected to 2.8% from 3% last time, with core CPI dropping to 3.4% from 3.6%. Good news, but still well above target and widely expected to pick up again later this year as the impact of the October budget take effect. GBPUSD is a smidge below 1.2900, an area we have tested a few times this week already, while GBPEUR, which had touched 1.2000 just before the release, also fell, currently standing at 1.1955.
ECB’s Villeroy has said ECB rates could fall as low as 2% by September. Meanwhile Trump has voiced unhappiness with the EU, following on from the rather derogatory comments made on the leaked group chat earlier in the week. Trump has said the EU is a freeloader and has acted terribly with regard to trade with the US. Elsewhere, Vance will be travelling to Greenland, a trip officials in Greenland have called disrespectful, as the US continue to talk about taking the country out of Denmark’s hands. I’m not sure Vance is the right guy to go schmoozing.
There was some excitement over headlines that Russia and Ukraine had agreed to a ceasefire in the Black Sea which will allow safe transit for commercial ships in the area. However it seems that Russia have added some conditions to the deal, including reconnecting some Russian banks to the Swift payment system, which are unlikely to be met. Trump has said it is possible Putin will drag his feet on ceasefire plans, which shouldn’t come as a surprise to anyone.
Aussie CPI overnight came in lower than expected which sent AUD a touch lower but it is the threat of tariffs that remains the biggest driver of AUD right now. AUDUS traded down from 0.6310 to 0.6280 overnight but has since lifted to 0.6320. GBPAUD is just around 2.0400 having seen a spike overnight up to 2.0580, half of those losses coming since the UK inflation release.
It’s another sparse economic calendar today, US durable goods the key release along with a couple of Fed speakers. At 12:30 we’ll hear from Chancellor Reeves who is expected to announce spending cuts in order to meet the government’s own ‘non-negotiable’ fiscal rules without raising taxes . With the OBR likely to cut growth forecasts there is a concern that these self-imposed fiscal rules may need to be broken, which of course wouldn’t go down very well at all. Rising borrowing costs for the government are a real worry, hopefully we won’t see a repeat of the Truss/Kwarteng debacle back in late 2022.
Have a great day…
- 10.00 ECBs Villeroy
- 12.30 UK spring statement
- 12.30 OBR forecasts
- 12.30 US durable goods
- 14.00 SNB quarterly bulletin
- 14.00 Feds Kashkari speaks
- 14.10 Feds Musalem speaks
- 18.00 ECBs Cipollone speaks
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