USD down, equities up despite ongoing US/Iran hostilities

Good morning

We’ve seen a bit of USD weakness filter into the markets as we near the end of the week.  GBPUSD and EURUSD are currently 1.3425 and 1.1440 respectively which puts GBPEUR at 1.1740, another high since June last year.  Perhaps BoE’s Pill’s comments that we’ll need a rate rise in the UK is helping give GBP a small boost.

USDJPY took advantage of the weaker US dollar, trading from 162.40 to 161.30 overnight as Japan FinMin Katayama talked of encouraging Japan pension funds to invest in domestic assets.  The idea of repatriation of Japan’s overseas assets gave Yen a bit of a boost but we are a long way from seeing anything that would turn the tide of Yen depreciation.  GBPJPY traded down from yesterdays highs around 218 to just below 217, as I type USDJPY has recovered a little to 161.70, dragging GBPJPY back above 217.

Equity markets continue to shrug off the latest US/Iran hostilities, still preferring to focus on the reports that US and Iran are still negotiating the peace deal, although from where I sit and such deal would be so incredibly fragile.  US and Asian markets were generally higher yesterday, European stocks seem to be opening on a positive footing this morning.  Oil prices remain above last week’s lows but still in the low to mid $70’s, some $50 off April’s highs. 

In the UK, Andy Burnham has been backed by 322 Labour MP’s to replace Starmer as the next Labour leader and therefore become the next UK PM.  Burnham is currently unopposed in the leadership contest, if this remains the same he’ll be confirmed as leader next week and will take office as Prime Minister on 20^th July.  In other political news, Ann Widdecombe has passed away at the age of 78.  She was a no-nonsense straight-talking MP who not everyone agreed with, even in her own party, but was certainly a character, the likes of which we don’t see very often in politics these days.

In sport, England cricketers have won the T20 series against India with an unassailable 3-0 lead in the five match series.  Meanwhile in tennis British hopes are on Arthur Fery who will play his semi-final match at Wimbledon this afternoon against Alexander Zverev, seeded second in the tournament.  The winner will face a tough test against either top-seed Sinner or the incredible Djokovic.

In rugby, the Nations championship continues this weekend.  England, after their battering by South Africa last week, take on Fiji tomorrow afternoon. Scotland face South Africa, but Japan v Ireland could be one of the more interesting matches.  Rugby fans who don’t like the sun could stay indoors and watch all six matches from 06:10 tomorrow morning to 20:10 tomorrow evening.

Of course, the main event in the football world cup which has seen France topple Morocco for a place in the semi-finals.  In the remaining quarter finals, Spain play Belgium this evening, England take on Norway on Saturday and Argentina play Switzerland on Sunday.   France remain tournament favourites although it’s little surprise given they are already through to the next round.  Argentina, Spain and England are all favourites to win their respective matches for a place in the semi-finals.  The England kick-off is at 10pm, a far more reasonable time than the previous match which kicked off at 2am. 

A light calendar today with just Canadian employment this afternoon.  Next week’s major economic releases come in the form of CPI inflation and retail sales from the US, as well as the latest BoC rate announcement.  Other data out next week includes China trade and GDP, and UK’s monthly GDP and industrial production.  

Its looking like another scorching weekend with temperatures in the 30’s and will remain around there into next week although I see thunderstorms are forecast for this time next week.  We could do with a bit of rain, that’s for sure!

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

-  13.30 CAD employment