A Remembrance Sunday to Forget:
The gravitas of yesterday’s Remembrance services were not enough to spare the fortune of the Pound throughout the Asian session last night and into this morning’s European session. Following another disappointing week for Brexit last week, CFTC data recorded yet another surge in net short Sterling positions, reflecting growing concerns about the progress of negotiations. On Sunday, Democratic Unionist Leader Arlene Foster reaffirmed her party’s intention to vote against a Brexit deal resembling May’s incumbent Chequers-based plan. This news led to an impression at market open of Brexit stagnation and domestic political instability as the impression of Theresa May’s minority Conservative government deteriorated. The rally in Brent Crude and WTI Oil at market open this morning gave yet more support to an already strong US Dollar. EURUSD continued to rally down below 1.1250; reaching the lowest rate in over a year. Once again on Sunday, the Italian Prime Minister reaffirmed the incumbent coalition government to remain within the Euro. However, the commitment gave yet another reminder of the risk that Italy poses to the fiscal stability of the Eurozone and the monetary governance of the ECB. For yet another consecutive day, the Euro has fallen.
Discussion and Analysis by Charles Porter
Australia 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 […]
Canadian Curveball Canada was one of the first movers globally to raise interest rates in the face of rising inflation. Whilst much of the rest of the world, including the US, the Eurozone and the UK were still sitting on their hands claiming inflation would be transitory, Canada was busy hiking rates. The nature of […]
US rate cuts Much of the momentum for EURUSD trading above 1.10 only a few weeks ago was built upon expectations of rate cuts by year end at the Federal Reserve. Whilst constantly changing, that view is under threat currently, with markets pricing stickier rate expectations than they previously had been. The Fed is still […]