Fed keep rates unchanged, BoE expected to do the same

Good morning

The US Fed kept rates unchanged yesterday evening.  Three members voted for a 25bps rate rise but the remaining members were happy to keep things as they are for the time being.  This was the first time since 2016 that three members had dissented in the same direction.  Warsh didn’t offer much additional insight with the Fed in a period of what he calls ‘watchful thinking’.  One 25bps rate rise this year is being priced in by the markets but despite this the USD has weakened following the meeting, with GBPUSD trading to highs around 1.3385 and EURUSD to 1.1475, both some 35 pips off those highs as I type.  GBPEUR continues its steady decline, now 1.1660.

Reports of more US strikes on Iran overnight has sent oil prices higher again although they are still below last week’s highs.  The attacks were in response to Iran’s surprise attacks on US assets in the region earlier in the week.  Trump’s idea back in February that the war would only last a few weeks now looks very wrong with no sign that Iran want to negotiate a peace deal despite Trump’s claims that they are desperate to do so.  There are reports that US are preparing a massive campaign against Iranian missile bases.

We have a host of EU data this morning including GDP but these rarely move the markets.  UK’s BoE meets today to decide whether or not to change interest rates, the consensus is firmly for no change but it will be interesting to see whether any other members join Pill and Greene in voting for a rise.  This afternoon brings plenty of US data including preliminary GDP data plus core PCE.

I’m off tomorrow and Monday, I’ve added in calendars for both days, the BoJ rate announcement in the early hours of tomorrow morning could be interesting but I’d be surprised if they do anything but keep rates unchanged.  USDJPY remains in the high 163’s, GBPJPY currently 218.40.

Not much in the way of sport while I’m away although I see Spurs will be playing Chelsea in Sydney on Saturday.  Both teams have new managers and have spent big in the transfer market over the summer.  Neither team will be playing European football next season so there is a hope that both teams will perform better in the league this season given they will play far fewer matches than some other teams. 

While you’re all enjoying temperatures here in the high 20’s, I’ll be off to Marrakesh where temperatures are forecast to reach 44°c, mildly uncomfortable to say the least. S till, I’m looking forward to enjoying an array of excursions and events that we have planned in our short trip. 

See you in August!

Have a great day…

-  09.00 German GDP

-  10.00 EU GDP, consumer confidence, unemployment

-  12.00 BoE rate announcement

-  12.30 BoE press conference

-  13.00 German HICP

-  13.30 US GDP, core PCE, initial jobless claims

Friday

-  00.30 Japan Tokyo CPI, unemployment

-  00.50 Japan retail trade

-  02.30 AUS PPI

-  04.00 BoJ rate announcement

-  07.30 BoJ press conference

-  10.00 EU HICP

-  13.30 CAD GDP

-  14.45 US Chicago PMI

-  15.00 US Michigan sentiment survey

Monday

-  15.00 US ISM manufacturing PMI