The friendly path
Today's news headlines:
'UK and EU make breakthrough in "constructive" talks on N Ireland trade'. UK Foreign Secretary Cleverly and his counterpart EU Commission VP Sefcovic have announced a tentative agreement to breach the post-Brexit relations issues. The key factor in this progress is access to real-time data from UK data systems to help manage the challenges of trade across the Irish Sea border. The Sunak negotiations are marked by a more cordial, constructive approach to deal-making, and no one is surprised. (Financial Times)
'US stocks pare gains after hawkish comments from Fed members'. Fed members Mary Daly and Raphael Bostic have both suggested a more hawkish policy path, reasserting previous official Fed guidance not to underestimate the determination of the Fed inflation-quashing stance. The market has been betting that central bankers will need to halt their hiking as recession looms, but officials seem keen to dissuade them.
The USD Index is trailing seven-month lows, with much of that value given over to EUR. Sterling remains fairly range bound since the New Year. Much of the commodity space – including energy mediums – remains down YTD, signalling slowing demand and presaging reduced costs. The latest comments from the Fed are stinging risk assets due to a higher perceived funding cost, so equities are coming in lower in the morning session. It's slow on the data front today; central bankers speaking at 10AM will be crucial.
UK BRC Retail Sales Monitor y/y: 6.5% vs 4.1% last month
EU French Industrial Production m/m: 2.0% vs -2.5% last month
CA Bank of Canada Governor Macklem speaking: 10:10 AM
JP Bank of Japan Governor Kuroda speaking: 10:10 AM
US Fed Chairman Powell speaking: 2:00 PM
GBP/USD – 1.2165
GBP/EUR – 1.1645
EUR/USD – 1.0740
USD/CAD – 1.3390
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*Indicative interbank rates taken on the day of writing. Please speak to your Dealer to find out the current rates available for you.