Good morning
Q1 is over and we’re into Q2, whatever that may bring. We have Trump’s Liberation Day tomorrow where we are expecting to see some tariff announcements and who knows what else at around 8pm UK time, but given the uncertainty it is little surprise that we’ve seen muted action in the currency markets and weakness in the equity markets.
USD did push a bit higher yesterday helped by a stronger than expected Chicago PMI, with GBPUSD trading as low as 1.2885 briefly, EURUSD hit 1.0785. Both recovered pretty quickly to 1.2910 and 1.0815, which put GBPEUR around its lows of the day at 1.1940. Relative GBP weakness came as No 10 said they are expecting to be hit by US tariffs. There had been a hope that we’d get away with it, with so much focus on Canada, EU and China. US have also expressed concern over the lack of free speech in the UK, quite a strong and unusual step.
RBA kept rates on hold yesterday but sounded cautious as to the economic outlook and made it clear they still regard current policy as restrictive and still sees getting inflation back to target as its key priority, with no rate cut discussed at this meeting and no clear path to a cut at their next meeting in May. GBPAUD is currently 2.0665, down from its highs yesterday around 2.0730.
Marine Le Pen did indeed get sentenced to prison (electronic tag rather than in custody) and barred from public service, ruling her out of running in the French 2027 presidential election, save for an appeal which she is sure to do. I really don’t know whether this is perfectly normal, or a way of preventing democracy by taking out the key opposition, certainly if it had happened anywhere outside main Europe we’d be talking of foul play. Other right-wing EU leaders, Italy’s Salvini and Dutch Wilders have expressed outrage, and even Putin has slammed the decision saying it is a violation of democratic norms.
Meanwhile reports suggest Putin is sending thousands of additional troops to Ukraine, there is growing feeling that Russia will try to make new inroads into Ukraine territory before and land carve up is agreed. And if war in Ukraine isn’t enough, China are conducting large military drills around Taiwan. As you know, I do believe that one of these days a military drill will turn into a full scale invasion, and there will be little anyone can do about it.
While talking of China, I have read that US tariff talk could just push China closer to its neighbours. China are reported to have suggested they will unite with Japan and South Korea in response to US tariffs. The US really is at risk of alienating its allies and forcing them into partnerships and deals with other trading blocs around the world, some of whom don’t quite share the values and morals the ‘western world’ seem to have in common
I see the guidelines for judges which could lead to two-tier justice is to be reversed. The plan suggested punishments should take into account details such as faith and ethnic minority. I presume it was one of those set out with good intention, perhaps to help survivors of abuse, but has been ill-thought through. Or perhaps it was indeed to punish some people harder than others.
Premier league action this evening sees second place Arsenal take on Fulham, and third place Forest taking on Man Utd. West Ham are playing against Wolves, a draw or win for West Ham would take them above Spurs. Could really do with West Ham and Man Utd losing, although a win for Wolves would put them within five points of Spurs down at the bottom. Not a great place to be.
So, with the sun shining, Putin lecturing Europe on democracy, Trump wanting to buy Greenland, China and Japan getting closer, free speech at risk in UK and Spurs near the bottom of the Premier League, it would be reasonable to assume it’s all just some sort of joke. But no, it may be April Fool’s Day, but this is all really happening. Oh joy!
Have a great day…
- 08.55 German manufacturing PMI
- 09.15 BoEs Greene speaks
- 09.20 ECBs Cipollone speaks
- 10.00 EU HICP
- 13.30 ECBs Lagarde speaks
- 14.30 CAD S&P manufacturing PMI
- 15.00 US ISM manufacturing PMI
- 17.30 ECBs Lane speaks
- 22.45 NZ building permits
- 01.30 AUS building permits
Comments