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GBP

Nvidia Earnings Offset Fed Losses in Currency Markets

The US dollar is edging lower as risk appetite recovers from a surprisingly-hawkish set of Fed minutes. The greenback surged yesterday afternoon after a record of the Federal Reserve’s last meeting showed officials expressing doubts over whether interest rates were tight enough to bring inflation down to target, weighing on rate cut expectations across the front of the curve. According to the minutes, although policymakers generally thought the central bank was “well positioned,” there were “many” who felt “uncertainty about the degree of restrictiveness” being imposed on the economy. “Various participants mentioned a willingness to tighten policy further should risks...

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Hawkish Fedspeak Forces Modest Market Retreat

Traders are staying in their foxholes this morning after a flock of Fed officials delivered a remarkably unified message on rate cuts, warning markets not to expect easing to begin for many months yet. Speaking at the Peterson Institute in Washington yesterday, Governor Waller counselled patience, saying “In the absence of a significant weakening in the labour market, I need to see several more months of good inflation data before I would feel comfortable supporting an easing in the stance of monetary policy”. At a separate event, Cleveland’s Loretta Mester said “I need to see a few more months of...

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Data reinforcing central bank divergence

• Consolidation. US equities ticked up & based metals rose, while yields dipped despite ‘hawkish’ Fed rhetoric. USD & AUD tread water.• Divergence. Slower Canadian inflation bolstered BoC rate cut bets. Will today’s UK CPI do the same? Divergence with the RBA is AUD supportive.• RBNZ today. Rates expected to be held steady. Restrictive settings are working. Will the RBNZ tweak its forecast track to show earlier rate cuts? Another quiet night with limited net moves across the major markets. In contrast to the modest dip in European equities US stock markets ticked up again with the S&P500 (+0.3%) recording...

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Copper charging higher

• Quiet start. Limited moves across most markets. US equities firmer. Long-end bond yields a touch higher, as is the USD.• Commodities. Copper hit a record as strong demand comes up against constrained supply. There are cyclical & structural forces at play.• AUD swings. After its positive run AUD slipped back slightly. Policy divergence, rising commodity prices, & buoyant equities suggest the AUD is undervalued. As is usually the case, it was a relatively quiet start to the new week across global markets. No major economic data was released which could shift the dial. On the speaker front, there were...

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Will the AUD’s upswing continue?

• Mixed markets. US equities consolidated, while yields ticked up. The USD tread water, however the AUD outperformed with industrial metals firmer.• China measures. China announced various steps aimed at absorbing excess inventory & propping up the property market. This is a positive for the AUD.• Event radar. US Fed speakers will be in focus. CPI data out of Canada & the UK also due, as are the latest PMIs. RBNZ meets on Wednesday. Most of the major global equity markets were little changed on Friday with the US S&P500 ticking a bit higher (+0.1%) and the key European indices...

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