Still waiting for that peace deal

Good morning

It may only be a brief report this morning as I’m heading off on a golf weekend shortly.  This will be my first golf since I had my right shoulder replaced back in February.  I’m still not certain I’ll be playing, I haven’t even swung a club for almost a year, but I’ll probably give it a go and see what happens.  And of course I wouldn’t miss the weekend anyway, its one we do each year with some good friends from my old football team, some of whom I really only see at this event these days.  Looks like the weather will be good and a bit cooler than we’ve had it recently which is something of a blessing. 

To the markets and once again it is talk of a possible Iran deal to extend the ceasefire and reopen the Strait of Hormuz that seems to be moving the markets more than anything.  European markets closed down yesterday but US markets hit record highs and Asian markets had a strong session overnight.  Oil prices are trading near the lowest we’ve seen since the US/Iran ceasefire was announced despite the boss of Chevron warning oil prices could jump in the coming months due to reduced supply.  

Markets are brushing off the reported Russian drone strike on a residential building in Romania.  This is most likely an accident but marks a serious issue facing countries closer to Ukraine, particularly after reports earlier in the week suggesting Putin may look to spread the war to other European countries.  Meanwhile Armenia, who have historically had close economic and military ties with Russia, are facing parliamentary elections next weekend, a win for the pro-Western PM Pashinyan is likely to see Armenia seek EU membership.

I do find it interesting that the US dollar has not weakened more on this mildly positive development , it is almost as though the currency markets don’t quite believe the hype.  Perhaps the more hawkish tone taken by Fed officials recently is having an impact on the US dollar.  GBPUSD is 1.3430, EURUSD 1.1650, leaving GBPEUR 1.1530.  USDJPY remains in the 159s although is off yesterdays highs with traders still wary of further intervention on approaches to 160.  Both AUD and NZD have both benefitted from this latest boost to risk sentiment, now at 1.8750 and 2.2530 against GBP respectively.  AUD has continued to lose ground to NZD though, AUDNZD now around 1.2020 which is good news for the buyers of the AUDNZD puts I mentioned yesterday.  RBNZs Breman reiterated NZ rate could rise sooner and higher than previously thought.

I must say I feel very bad for not mentioning Crystal Palace’s Europa Conference league final win in yesterday’s report.  Their win means English teams have now won the Europa League and conference league, can Arsenal complete the treble by beating PSG in the Champions League final on Saturday? 

Today’s calendar sees several central bank speakers but otherwise its fairly limited although it is always interesting to hear what BoEs Bailey has to say, he speaks later this morning.  Next week is June, where does the time go?  We have EU retail sales and inflation, Aussie GDP and a raft of US employment data culminating in the nonfarm payrolls on Friday.  A strong reading here could persuade Fed officials that the labour market is resilient enough to handle a rate increase.  BoEs Bailey will be speaking several times next week as well.   

To the weekend then and we have Champions League final to enjoy on Saturday afternoon, a 5pm kick off is perfectly timed to coincide with us finishing our Saturday rounds of golf.  As a Spurs fan I shouldn’t really be cheering for Arsenal so perhaps I’ll brush up on my French for the match, ‘Allez PSG’, that sort of thing although now Spurs have survived the relegation battle I’m happy enough to not care one way or the other and part of me would like to see England win all three European trophies.  Once this weekend is out of the way attention will surely turn to the World Cup finals which start on 11^th June.  Plenty of football transfer news doing the rounds in the meantime I guess.

Have a great day, and a great weekend as and when it comes…

-  09.30 BoEs Bailey speaks

-  11.50 Feds Schmid speaks

-  13.00 German HICP

-  13.30 CAD GDP

-  14.10 Feds Bowman speaks

-  14.15 Feds Paulson speaks

-  14.45 US Chicago PMI

-  18.40 Feds Daly speaks