Good morning
US inflation yesterday came in pretty much in line with expectations, indeed the core reading was actually a touch lower than estimates at 3.2%, all of which helped dent the recent hawkish USD theme and sent GBPUSD up to a high of 1.2305 and EURUSD to 1.0350. The move didn’t last long mind you and into the London close the two pairs were back at 1.2200 and 1.0275 respectively, with GBPEUR at 1.1880.
GBP’s inability to hold higher levels seems to stem, in part at least, from comments by BoEs Taylor who has said in his first public speech that he thinks we’ll see at least 1% of rate cuts this year and prefers to act pre-emptively to help out the slowing economy. Meanwhile, UK GDP and industrial production data released this morning provided more evidence of the UK economic woes, both coming in lower than expected,
The initial USD weakness sent USDJJPY sharply lower, reaching 156.00 before the reversal which saw the pair back up at 156.70. Talk overnight of BoJ rate rise next week sent the pair to an overnight low of 155.20, now 155.85. GBPJPY traded down to 189.80 before trading back up to 190.90 before the weak UK data took its toll. 190.20 as I type.
Romania kept their rate unchanged at 6.5% yesterday as expected. There had been some looking for a possible rate cut but with inflation still running above the central bank forecasts it was only a very outside chance. EURRON
Aussie employment overnight was a mixed bag. The headline employment change came in at a very decent +56.3k but the details show this was due to a large increase in part-time work, with full time employment actually falling by nearly 24k. AUD initially pushed higher, GBPAUD traded below 1.9600 briefly before reversing over 100 points to just above 1.9700. Now 1.9625 after the UK data took its toll.
A six-week ceasefire between Hamas and Israel is set to begin on Sunday which should see the release of hostages held in Gaza, Israeli troops pulling back and aid being allowed in. Whether this leads to a permanent end to the conflict remains to be seen but it is certainly a step in the right direction.
In other news, Jeff Bezos’ Blue Origin rocket has launched into orbit in a successful mission, except the booster failed to land on its platform on its return to earth. Despite the booster failure, this is a big step forward for Bezos. His company is trailing Musk’s SpaceX, which yesterday launched a rocket carrying two lunar landers. Its booster did land on back on its floating platform, pretty incredible.
Spurs were unable to pull off any incredible feats last night, losing 2-1 to Arsenal. They did take the lead but Arsenal dominated for much of the match and Spurs struggled to have any great impact. Spurs did hit the post late on in the game but the reality is Arsenal could have scored more. Spurs are 13th in the table and could slip lower this evening if Man Utd beat Southampton.
US retail sales the highlight this afternoon, and UK retail sales will be released early tomorrow morning. I have a bad feeling about UK sales data and also a bad feeling about GBP in general. Here’s hoping I’m wrong.
- 12.30 ECB minutes
- 13.30 US retail sales, Philly fed survey, initial jobless claims
- 21.30 NZ business PMI
- 02.00 China GDP, retail sales, industrial production
- 07.00 UK retail sales
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