Well it was all going fairly quietly this week as I’d expected, US dollar a little soft, GBPUSD trundling along just below 1.1900 and EURUSD in the low 1.03s. Through yesterday morning USD weakened and a softer than expected set of PMI numbers from the US in the afternoon saw GBPUSD trade above 1.2000, before FOMC minutes sent USD down further and overnight GBPUSD traded to 1.2110. It has now backed off a bit to 1.2080 but this really is quite a turn. FOMC minutes showed members saw a slower pace of increases, this was the message Powell had already given. They also showed that the risks of a recession in US were running at 50%.
EURUSD had a similar move, now 1.0415 although GBP was the clear winner, the court ruling that Scotland cannot start their own independence referendum without the approval of the UK government offering additional support to GBP, as did comments from BoEs Pill who confirmed the need for additional rate rises. All this saw GBPEUR push up to 1.1650, it has since slipped back to 1.1600 and as always there are questions as to whether it can hold onto gains, but for the time being it is stronger than it was this time yesterday.
Several BoE speakers through the day today, we do have ECB officials speaking and the ECB minutes from the recent meeting where they raised rates 75bps, these may offer some insight as to ECBs thinking for pace and scale of rate rises in December and the coming months.
In China, Covid cases continue to rise and new lockdowns are being reported, including in Zhengzhou which only started coming out of restrictions a couple of weeks ago. This is the site of the iPhone factory which has recently seen protests over lockdowns, as we know protests don’t usually go down very well in China. I did read that workers have been given money to leave and avoid further troubles. There is talk doing the rounds that China will cut its RRR to give a helping hand to the economy, could come as early as this week.
NZ retail sales due overnight, not expected to be a great number which could raise questions over whether RBNZs recent 75bps rate increase was the right thing to do.
Spain looked pretty good against a weak Costa Rica team in the world cup yesterday, Germany didn’t look quite so convincing as they let a one goal lead slip to lose 2-1 to Japan. I’m looking forward to see how tournament favourites Brazil get on against Serbia today. Three other matches to look forward to before then, the first being Switzerland v Cameroon.
To any US readers who may log on to check their emails later, a very happy Thanksgiving to you. As you know I was thinking this week would be quiet, certainly didn’t see a 300-350 point rise in GBPUSD on the cards this week, that’s for sure. Markets really should quieten down this afternoon but we’ll be here watching just in case.
- 09.00 German IFO
- 09.45 BoEs Ramsden speaks
- 10.30 BoEs Pill speaks
- 11.15 ECBs de Guindos speaks
- 12.30 ECB minutes
- 13.00 ECBs Schnabel speaks
- 13.45 BoEs Mann speaks
- 21.45 NZ retail sales
- 23.30 Japan Tokyo CPI
- 07.00 German GDP
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