Ceasefire looks broken as US/Iran trade shots

Good morning

I’m back from a few days off, been in Paris which I have to say was better than I’d remembered.  We set off the morning of the England world cup win over Mexico, an early start meant we had little sleep but an easy Eurostar service to the centre of Paris set us up for a pretty full-on but worthwhile trip.  My step-counter showed some pretty impressive numbers despite temperatures approaching the mid-30’s, all in all a very pleasant few days.

I arrive back to see that US and Iran have traded military strikes although financial markets seem to be shrugging that bit of bad news off for the most part, Asian stocks were  up overnight and most European markets are positive this morning.  Oil prices are up although currently approximately $3 off the highs seen yesterday evening.  Trump says Iran wants to continue negotiations but we know better than to be optimistic and indeed Trump himself has said he doesn’t necessarily trust Iran to honour any deal made.

 In terms of currencies, nothing is too far for where I left them last Friday.   The US dollar is a bit softer after last week’s nonfarms, EURUSD is 1.1435, GBPUSD is 1.3420, GBPEUR 1.1735 and we see 1.9350, 2.3425 and 218.00 for GBP against AUD, NZD and JPY.  The latter come as USDJPY continues to trade in the 162’s with no real sign of official intervention.  NZD has been reasonably volatile, seeing 2.3350 earlier in the week, then 2.3530, back to 2.3350 before heading above 2.35 again, now 2.3425.  Some of this volatility stemmed from the RBNZ raising rate 25bps in the early hours of Wednesday morning which gave NZD a short-lived boost.

FOMC minutes yesterday evening were scrutinised given it was Warsh’s first meeting as Fed chair.  Most members saw increased upside risks to inflation while downward pressure on employment seems to have moderated.  Even those who would have preferred a rate rise were happy to go along with the majority.  The accompanying statement was much shorter in line with Warsh’s dislike of forward guidance, something most members seemed to agree with.

I’ll keep it short this morning as I try to get back into the swing of things, I’m sure I’ve missed some things from when I was away but I see little point in going back and digging up news and data that you probably already know. 

Have a great day…

-  10.30 BoEs Breeden speaks

-  13.30 US initial jobless claims

-  14.00 Feds Williams speaks

-  15.00 US existing home sales