Good morning
UK and EU stocks closed on a positive note yesterday although US stocks closed slightly lower. Asian equities were mixed, as are futures prices this morning which show some gains for the US but small declines for the UK and EU. While the direction is uncertain, it is good to see more stable markets.
Looking at currencies, GBP continues to look a bit vulnerable, GBPUSD now at 1.2700 which is actually where it was around this time yesterday, while GBPEUR is a smidge lower at 1.1610 having very briefly broken down through 1.1600 overnight, the lowest level since April. EURUSD looks comfortable at 1.0940 and even USDJPY has been reasonably stable, now 146.00, although there are still warnings of potential huge unwinds in yen cross carry trades.
AUD pushed a little higher after RBA’s Bullock mentioned she would not hesitate to raise interest rates should the need arise. RBA had kept rates unchanged at their meeting earlier this week but did consider pushing rates higher and now see inflation back to target levels even later than previously thought. GBPAUD now 1.9380, a fair bit lower than the highs we saw earlier this week.
NZD dipped on lower inflation expectations, nothing too dramatic but will certainly get thoughts of an RBNZ rate cut back on the agenda. AUDNZD pushed up from 1.0865 to 1.0940, helped by both the stronger AUD and weaker NZD, it is now 1.0915, GBPNZD at 2.1160.
I don’t often mention the Swiss Franc but I note that USDCHF traded as low as 0.8450 this week, EURCHF was down to 0.9215 and GBPCHF to 1.0750. Those pairs are all slightly higher now but the renewed strength of CHF is causing concern among Swiss manufacturers, who are lobbying the SNB to do something. I’m not sure what they really can do, CHF is attractive as a safe haven and with the geopolitical risks still running high it is no surprise CHF is sought after.
Romania did cut rates 25bps to 6.5% yesterday as had been expected, the second consecutive cut. EURRON was hardly impacted on the announcement and eyes now on their next meeting on 4th October.
Ukrainian forces have attacked a town in the Kursk region of Russia, a rare foray into the Russian mainland. Details are not clear, nor is the driving factor behind the decision to attack, although it would seem the hope is that Russian forces will have to be redirected to the area, reducing their ability to attack Ukraine on the front line.
Meanwhile, Israel are still awaiting a response by Iran and its allies to the recent attacks by Israeli forces on Hamas and Hezbollah leaders. Retaliation had been expected earlier in the week, there is some suggestion now that Iran may not retaliate, but it is far too early to hope for a de-escalation in the region.
Olympics today brings quite a lot of athletics, with women’s heptahlon and the 4 x 100m relay heats later this morning, plus the finals of the speed climbing just before midday. Plenty of cycling through the afternoon, then more athletics with the mens 200m final probably the highlight this evening.
Those missing football will be pleased to hear the new season is almost upon us, with the first matches in the Championship taking place tomorrow evening and the Community Shield between the two Manchester sides on Saturday. Premier league action starts next Friday.
The weather today here looks pretty decent for now although its not very warm and rain is expected through the afternoon. Things do perk up a bit from tomorrow and I see Sunday and Monday could well be back in the 30’s. I’m looking forward to that.
Not much on the calendar today, nor Friday for that matter.
Have a great day
- 13.30 US initial jobless claims
- 20.00 Feds Barkin speaks
- 02.30 China CPI
- 07.00 German HICP
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