With a 25 bp increase in interest rates, the Reserve Bank of Australia took interest rates to an 11 year high of 4.1% and with that increase took the total increase since May 2022 to 4% which is the most aggressive rate tightening cycle ever. This was not expected and consequently had a disproportionate effect in the market. Not content with that, the language from the central bank suggested further rises were on the cards in the fight to crush inflation. The Aussie dollar strengthened by 1%.
Recent moves by the Federal Reserve in raising interest rates and its language have served to strengthen USD. Yet again with USD/JPY trading around 140 talk has turned to pondering whether the Bank of Japan will intervene and at what level to reverse the move from 130 to where we stand now. Most expect intervention to be deployed first when/if the rate reaches 145 and then if necessary if JPY weakens towards 150 as it did in 2022. Meanwhile few market participants expect the JPY to strengthen much in the light of the BoJ’s low interest rate policy.
UK Interest Rates
In case you are getting dulled with pain on this one and have lost sight of what is next in store, the expectation is that the Bank of England will raise interest rates on June 22 to 4.75% and that rates will reach 5.5% later in the year. More positively ahead of the summer holidays GBP is firm against the EUR: GBP/EUR 1.1610.
Right up there with capturing the current zeitgeist for woke name badges is Easyjet, which is now including the pronouns by which their staff and aircrew identify on their name tags. It is all part of creating an inclusive environment where everyone can feel “comfortable.” Except for the customers of Easyjet of course who will end up paying for this inclusivity on top of the earlier indignity of Easyjet already advising their staff to no longer address passengers as Ladies and Gentlemen when saying good morning/afternoon/night.
One of rock’s so called supergroups, Blind Faith comprised Steve Winwood, Eric Clapton, Ginger Baker and Rick Gretch and this day in 1969 they played to a crowd of 120,000 in London’s Hyde Park which turned out to be their one and only live performance. Here is the best song from the band: Can’t Find My way Home:
Come down off your throne and leave your body alone Somebody must change You are the reason I’ve been waiting all these years Somebody holds the key
Well, I’m near the end and I just ain’t got the time And I’m wasted and I can’t find my way home
I can’t find my way home But I can’t find my way home But I can’t find my way home But I can’t find my way home Still I can’t find my way home And I’ve done nothing wrong But I can’t find my way home
Discussion and Analysis by Humphrey Percy, Chairman and Founder
The only haven The avoidance of a hard landing according to many projections of most economically significant geographies has undoubtedly moderated perceived financial risk. Back when recessions were forecasted and priced in as the base case to follow the interest rate hiking cycle, there was greater financial risk within the system. Despite a more sanguine […]
US Interest Rates Nothing much new over the weekend other than while sifting thought the tea leaves from last week, we found that not one but two members of the FOMC, the rate setting and policy making committee of the Federal Reserve, advocated US interest rates staying higher for longer to crush inflation. Within their […]
A revised 2024 The Dollar opens stronger this morning following the Federal Reserve’s decision last night. The decision confirmed interest rates were to stay on hold following this meeting. As we have highlighted following previous decisions, the forward guidance offered by the Chair Jay Powell was once again underwhelming. However, the Dollar’s bid this morning […]