Dollar Retreats as Risk Sentiment Improves, Oil Slides and NZD Rallies
It was a pretty quiet day in the currency markets yesterday although equity markets put on a decent recovery after last week’s AI-led declines. This improvement in risk sentiment has been helped by some optimistic talk from Trump over possible Iran peace talks which has pushed oil prices to their lowest levels for over two months, although he has confirmed the US is ‘locked and loaded’ in case military action is necessary. Just as we saw USD push higher when equities dropped last week, the improved risk sentiment has sent USD lower, with GBPUSD up to 1.3450 and EURUSD to 1.1240.
China trade data overnight showed a smaller surplus than expected but still a very hefty number, coming in at $105bn for October. This takes the trade surplus to over US$1trn for Jan-Oct which puts in on course for a record surplus, something its trading partners around the world won’t be overly happy with. Trump is due to meet China President Xi in Shenzhen next week, there is also a suggestion that he could meet Putin there as well as press reports suggest Zelensky may be open to some compromise on territory in order to help peace talks.
NZD has made ground following hawkish comments by RBNZs Conway who made it clear high inflation expectations could lead to another RBNA rate rise in December. GBPNZD is down to 2.3820, some 360 pips off Friday’s high. AUDNZD has dropped to 1.2265, its lowest level for two months, impacted not only by the stronger NZD but also by poor Aussie confidence data which has helped weaken AUD. GBPAUD is 1.9410.
Otherwise, headlines seem to revolve around personal lives including Brand’s sentencing and Nvidia’s Huang and his affair with a possible Chinese spy, both stories leading to much commentary on the likes of ‘X’.
Jobs are also in the news, with a suggestion that Carrick may leave Man Utd today, while other press reports talk of a civil servant who, over Covid, had eight public-sector jobs that paid him some £350,000. Now, I don’t mind people working hard, but his contracted hours were 184/week, more than the 168 hours that are actually available in seven days, which explains why he was on long-term sick leave from some of his jobs. Quite how no one ever noticed is beyond me, surely there must be personnel checks made before hiring someone. Anyway, the fraud was eventually discovered and he’s been told he will be facing a custodial sentence.
US CPI inflation today, note that there will not be an annual reading this time due to a lack of data during the US government shutdown this time last year. Plenty of central bank officials speaking, they seem to offer a similar message whether they are from Fed, ECB or BoE, namely warnings of second round effects and doors open for further rate rises. Still, this current dip in oil prices will be a welcome sight.
Have a great day…
- 09.00 Feds Waller speaks
- 12.30 BoEs Lombardelli speaks
- 13.15 US ADP 4 week average
- 13.30 US CPI
- 14.00 ECBs Cipollone speaks
- 16.45 ECBs Lane speaks
- 17.30 ECBs Escriva speaks
- 18.30 BoC minutes
- 18.30 BoEs Pill speaks
- 20.30 Feds Bowman speaks
- 23.30 Feds Paulson speaks