Good morning
For the first time I can remember there are no major economic releases on the calendar today. However this doesn’t mean there is no news, far from it.
Let’s start with Friday’s immense US nonfarm payroll number. A headline in the region of +175k had been expected, it actually came out at +272k with the average earnings figure up to 4.1%, which sent the US dollar surging higher as rate cut hopes faded once again. It wasn’t all good news, the previous months data had been revised lower, only by 10k mind you, the unemployment rate ticked higher to 4%. The move was exaggerated as the risks seemed to have been lined up for a weaker headline, so when the data was released all those USD sellers were cutting their shorts.
GBPUSD traded from 1.2810 to 1.2720, where it has pretty much stayed ever since. USDJPY jumped from 155.50 to 157.00. EURUSD lost its recent gains, trading from 1.0900 to 1.0800. However, the EU elections which, if I am honest, I’d not paid enough attention to, have seen a surge in voters to the right which has sent EUR lower still. EURUSD is now 1.0755, leaving GBPEUR up at 1.1825, up through that 1.1770 area that has capped the upside since August 2022, before the Truss/Kwarteng debacle.
EU politics is in turmoil. Macron has called a snap election after his party suffered huge losses at the hands of Le Pen’s National Rally. Gains from right wing parties have also been noted in Italy, Australia and Germany, the latter has seen Chancellor Scholz’s own party earn their worst ever result, dropping behind conservatives and the right wing AfD. Its not all gains to the right mind you, Sweden, Finland and Denmark saw left and greens make gains.
In the UK, Labour must be looking at the European elections and thinking that perhaps their hopes of a huge win in the general elections may be at risk.
While it’s a pretty non-existent economic calendar today, and other than UK unemployment tomorrow morning Tuesday has a limited calendar, there is plenty of event risk later in the week. Wednesday is the key, with German HICP and UK GDP in the morning, the main events follow in the afternoon with US inflation and then the FOMC rate announcement, which will include updated forecasts and rate projections, the ‘dot plot’. No changes expected in rates but it is thought the dot plot could point to fewer lower rate calls.
We’ll skip over England’s performance in their loss to Iceland on Friday. They really looked like an England team of old, no real ideas, limited shots on target, not at all what we’d been hoping for as tournament favourites. The Euro’s begin on Friday with Germany v Scotland. I’m not downplaying Englands chances, they do have a reasonable squad but need to gel a lot better as a team. With France, Germany, Portugal, Spain and Italy, plus world cup semi-finalists Croatia, there is a lot of quality to get through to win the trophy.
That’s about all from me for the moment. No data today but I’ll be watching headlines out of Europe closely. UK unemplpyment early tomorrow morning
Tuesday
- 0700 UK unemployment
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