Chinese quarantines disrupting shipping

China is so concerned about re-importing covid that they have placed 7-week quarantine restrictions on ships’ crews coming ashore in Chinese ports and not allowing crews to come ashore, even for medical emergencies if the ship is leaving with the same crew. The fact that China is the world’s largest exporter and therefore the most frequently visited country by cargo ships, means these restrictions will have a knock-on effect on already strained supply chains. We haven’t seen the impact yet but we will.

AUD set to strengthen on capex news and forecast stronger retail sales

A reported rise in Australian capital expenditure plans has supported the Australian dollar, despite the current data being a tad weaker than expected. There’s a good chance the GBPAUD rate would be lower this morning. As it stands, this exchange rate is slap bang in the middle of its current range at AUD 1.8524 but the forecasts for tonight’s Australian retail sales data are very strong so this pair could well be lower by this time tomorrow.

The minutes from the last Federal Reserve Open Market Committee meeting show the concern amongst the board members relating to rising inflation and the impact that could have on the US economic recovery. it would seem The Fed is ready to accelerate its reduction of bond purchases and perhaps even to raise interest rates sooner than many had envisaged. The GBPUSD rate hasn’t been this low since December 2020. it starts today at $1.3340 and there are some GBP buyers in the market. USD sellers, please take note.

The EURUSD rate is down to lows not seen since June 2020. The Strength of the USD has combined with the concerns over covid and supply chains in Europe sees this pair start Thursday just above $1.12. This morning’s German GDP data was slightly weaker than expected at 1.7% Q/Q and the Gfk consumer climate index was very poor at minus 1.6. We have very little data in the rest of the EUR data diary today, so further EUR weakness cannot be ruled out.

Sterling traders await BOE speech

The GBPEUR rate is still capped by €1.1930 and supported at €1.1860. So no change there then. The highlight on the UK side of the channel today is a speech from the Governor of the Bank of England. I know! We lead such exciting lives, don’t we? All we want to hear is whether the BOE is going to tighten monetary policy and when. A single bullet point slide would do the job Governor Bailey.

This being Thanksgiving Day in the US, there is no data to come from across the pond today and some sideways trading in the value of the US dollar is very likely. We will get Japanese inflation data overnight tonight and, as mentioned earlier in the week, the Japanese yen has been under some pressure over the last week. Any uptick in inflation is likely to calm the nerves here. So don’t be surprised if the GBPJPY and USDJPY rates are lower tomorrow morning.

In honour of Thanksgiving Day, I’ll leave you with a saying that I think can be attributed to many people, probably because is so very true, “If a person isn’t thankful for what they’ve got, they are highly unlikely to be thankful for anything they get in the future either.”

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