Markets await Fed rate announcement

Good morning

US data releases will be one hour earlier at 12.30 or 14.00 London time. 

FX option expiries will be 14.00 London time, not the usual 15.00 London time.

This will be until Sunday 29^th March when we change our clocks in the UK.

One month ago to the day I got home from my right shoulder replacement. Its been an interesting month, probably a tad harder than I’d expected, bearing in mind I’d been through it before with my left shoulder, but even so I’m on the road to recovery.  I have my postponed appointment with the physio this afternoon where I’ll hopefully be told I can start moving it a little more to begin to rebuild the muscles around the joint to give it the best chance of recovery. 

AUD continued to push higher yesterday with AUDUSD breaking above 0.7100 and GBPAUD trading back below 1.8800, mostly on May rate rise thinking.  I did see that BA are adding extra flights to Melbourne as flight disruptions continue in the Middle East and travellers look for alternative destinations.  Reports are that Spain is benefitting from increased Easter travel but perhaps the likes of Australia will win some of that business as well.  Flights to South Africa and USA are also increasing.

GBPUSD is currently 1.3350, EURUSD 1.1535 and GBPEUR 1.1575, while USDJPY has dipped below 159.00 as the US dollar loses just a little of its recent shine.  Currency markets have been fairly rangebound, as have equities and oil prices as markets do their best to work out how events in Iran and the Strait of Hormuz will pan out but as yet there is no sign of de-escalation.  

Of equal interest is how the US relationship with its allies will pan out.  Trump has been disappointed with the response of the ‘West’ in helping out it Iran, and he was equally disappointed with being unable to bring about peace in Ukraine.  I wonder whether he is still favouring Putin’s side now it is reported that Russia have been giving satellite imagery to Iran to help them target US forces.   Whether Russia have also been providing Iran with weapons remains to be seen. 

Today we have the latest rate announcements from BoC and FOMC.  BoC are expected to keep rates unchanged at 2.25% at their meeting this afternoon.  FOMC are also expected to keep rates on hold at 3.75% this evening, despite some still seeing an outside chance of a cut.  Higher energy prices as a result of the Iranian war seems to have put paid to rate cuts for the time being.  We’ll also get the latest economic projections from the Fed and it will be interesting to see whether there is any hawkish tilt in forecasts. 

Chelsea and Man City were dumped out of the Champions League last night, Arsenal was the only English club so far to get to the quarter finals with a 2-0 over Leverkusen.  This evening sees Spurs look to overcome their three goal deficit from the infamous horrors of the first leg, Liverpool will be hoping to get the better of Galatasaray, while Newcastle head to Barcelona after their 1-1 draw in the first leg.  England had six teams in the last sixteen but there is a real chance this will be whittled down to just one or two to make the quarters. 

Overnight could bring some volatility as well with NZ GDP, Aussie employment data and then BoJ rate announcement in the early hours of tomorrow morning, although as with BoC and Fed, BoJ are widely thought to be happy to keep rates on hold.  Early tomorrow morning we’ll have the latest UK employment data where a tick higher in the unemployment rate is expected.

Its gloriously sunny outside today and temperatures are forecast to be up near 20°c so if you manage to get away from the desk you could well feel some real warmth on your face, a sign perhaps that the cold and wet winter may be behind us at last.

Have a great day…

-  10.00 EU HICP

-  12.30 US PPI

-  13.45 BoC rate announcement

-  14.00 US factory orders

-  14.30 BoC press conference

-  18.00 FOMC rate announcement

-  18.30 FOMC press conference

-  21.45 NZ GDP

-  00.30 AUS employment

-  03.30 BoJ rate announcement

-  04.30 BoJ presss conference

-  07.00 UK unemployment