UK unlocking delayed 4 weeks

The foreign exchange markets trod water on Monday. Ranges were tighter than Boris Johnson’s belts. Well, he has shed a little timber. Cinching those belts a notch or two tighter must be a thing. And speaking of our PM, he had the unhappy task of announcing another 4-week extension to many lockdown measures to try to stave off the Indian variant. At some point, we are going to have to accept that we will have to live with covid-19, as we do with flu, chickenpox, measles etc. But that’s a political rather than a medical decision.

The delay didn’t impact the Pound, which is holding up well. It will have helped that the UK and Australia are finalising a trade deal to benefit both. GBPUSD starts the day just above $1.41 and GBPEUR starts at €1.1630. Both are still below their bête noirs of $1.4250 and €1.17.

RBA minutes – no change until July at the earliest

Back to Australian matters and the Reserve Bank of Australia released the minutes from their last policy-setting meeting overnight. As expected, they are inactive and will remain so until July at the earliest. I suspect that will stretch out by another month at least. Gosh that sounds familiar. GBPAUD is subdued at around A$1.83 but is in a short-term upward trend right now.

UK unemployment back down to 4.7%

I suspect that the uptrend will remain intact after this morning’s announcement that UK unemployment dropped to 4.7% in April and the May claimant count dropped by 92,600. The Governments furlough scheme is still in play, so that will mask some pressures but this is good news whichever way you look at it. We have a speech from the BOE Governor this morning. I don’t know if that will factor into his thoughts but we shall see.

The rest of this morning is pretty yawny but the afternoon will be shaken awake by US data. The biggies are retail sales, industrial production, and the TIC data; a measure of foreign buying of US treasuries. That is a useful bellwether for investor sentiment. We will also see US business inventories and crude oil stocks. The Dollar would normally be shunted around by such data but this may be a big week for the USD because there is a chance the Federal reserve will change tack at their Wednesday meeting. Monetary tightening and the timing of any such change will be the key elements in the Fed’s statement if we are lucky. BTW, the EURUSD rate is caught around $1.21; the lower end of its range over the last month. Many analysts are pointing to $ 1.2050 as the short-term target. Great for EUR buyers but not for USD buyers.

Overnight tonight, the NZ Dollar will be busy. Dairy price information, a consumer sentiment index, and New Zealand’s current account data will all be released. GBPNZD starts today near the top end of its recent ranges at NZ$1.9730. It has yet to breach NZ$1.98 and hasn’t been above there since September 2020. I know all NZD buyers would like $2 to the Pound but we need some kind of meaty catalyst to make that happen and it just isn’t there in this data.

And a chap from Staffordshire git a little drunk while listening to his favourite Canadian singer and decided to change his name to hers. Yes, Thomas Dodd is now officially Celine Dion. Whatever his name, here’s hoping his heart will go on.

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