Return to Insights

Not Many Signs of Doves

Friday feeling, ECB rolls back on rate cut expectations, French President says Europe should prepare to defend Ukraine, Rishi Sunak faces local election results, repositioning of US military hardware, and what's happening today.

Friday Feeling

Check out this week’s playlist here!

She’s Thunderstorms – Arctic Monkeys

I Ain’t Scared of Lightning – Tom McRae

Why Does it Always Rain on Me? – Travis

Wild World – Cat Stevens

Six Days – DJ Shadow

Another day, another central bank rolling back on rate cut expectations.

A couple of members of the European Central Bank’s governing council have spoken out, saying that rates are more likely to be cut three times this year instead of four. And that the bank won’t be pre-committing to a rate path and instead will be acting on a meeting-to-meeting basis. The ECB has a particularly tricky job at this point because inflation in Europe at an aggregate level is high, but on a country-by-country basis it ranges from less than 1% to more than 7% – and yet there’s only one interest rate to go around.

After the Federal Reserve wasn’t quite as hawkish as they could have been on Wednesday night, HSBC now thinks it’s on for one cut this year and three cuts in 2025.

Meanwhile gold is benefitting from the persistence of inflation, sitting above $2,300 at the moment and forecasts from Goldman Sachs that it will be at $2,700 by the end of the year.

In France

President Emmanuel Macron has said that Europe should prepare to defend Ukraine by sending troops if Russia were to break through defensive lines. Mr Macron, speaking with the Economist, said “If Russia wins in Ukraine, there will be no security in Europe…who can pretend that Russia will stop there? What security will there be for other neighbouring countries, Moldova, Romania, Poland, Lithuania and others?”. His position is much more hawkish than other NATO members, with Germany ruling out putting any boots on the ground and the US even limiting the intelligence they’ve sent to Ukraine, in order to play an ‘arm’s length’ role on the battlefield.

In the UK

The prime minister has his other battles on his hands at the moment and early signs from the local elections aren’t boding well. Every commentator is keen to stress that it’s still too early to tell if this trend will continue – as local councils ironically don’t have the budgets now to pay people to count votes through the night – but the early picture is that Labour has picked up a couple of key Conservative strongholds and other parties are making gains at their expense too.

Rishi Sunak will really be concerned about the mayoral elections in Birmingham and Tees Valley, where Andy Street and Ben Houchen are defending their seats. These should be won by the Conservatives – with Ben Houchen taking 72% of the vote when he won in 2021 and Andy Street being seen as very capable and happy to distance himself from his party – but if they aren’t successful here, or the overall election result shows losses of more than 500 then we’d imagine the no-confidence letter threshold is reached in pretty short order.

In the States

The US has been repositioning military hardware in the Middle East, which has got the attention of the markets. According to the Wall Street Journal the Pentagon has shifted fighter jets and armed drones out of bases in the UAE and into Qatar. The move is geographically inconsequential, but it’s being seen as material because the UAE told the US in February that it wouldn’t allow the US to use its base in the country to carry out airstrikes in Yemen and Iraq. Moving the hardware to Qatar gets around this problem and will be noted by various actors in the region.

Looking to Today

 It’s been a public holiday in China and Japan today so the market is off to a slow start, but there are a couple of data points the market will be watching. The UK PMI reading for the services sector. It’s expected to show strong growth, with a reading of 54.9. The US non-farm payrolls is forecast to print at 250,000 jobs created – this number has been regularly beaten of late, but then revised down the month after. It’s hard to see much denting the strength of the dollar at the moment though!

Have a great weekend.

Ready to talk FX?

Get in touch with one of our friendly and knowledgeable experts to see how FX strategy can drive commercial impact in your business.



Find out how we have helped our clients meet their hedging requirements.

Los rendimientos y el resultado de los PMI En EE.UU impulsan al billete verde

La moneda común mantiene algunas ganancias  muy contenidas en su cruce frente al billete verde...

Esperando las Actas del FOMC para tomar una nueva dirección

La moneda común ha experimentado pérdidas contenidas en su cruce frente al billete verde...

El par encuentra cierta calma en la previa de la publicación de las Actas del FOMC

Hoy hemos amanecido conociendo el Índice de Precios de Producción alemán. La lectura mensual ha cumplido con las previsiones, mientras que el IPP anual de abril se ha situado por encima de las previsiones...

El par comienza la semana con la mirada puesta en las Actas del FOMC

La moneda común ha comenzado la semana ganando parte del terreno perdido en su cruce particular frente al billete verde...

El dólar recupera terreno para cerrar la semana

La moneda común a comenzado la jornada con algunas pérdidas frente al billete verde...

El IPC y las Ventas Minoristas castigan al billete verde

Durante la jornada de ayer, pudimos observar un repunte en el par EUR USD. Este vino dado, principalmente por datos de Estados Unidos...

Miradas puestas en el IPC de EE.UU

La moneda común ha comenzado la jornada continuando con su movimiento alcista en su cruce particular frente al billete verde...

El par permanece estable. Miradas puestas en el PIB de la zona euro

En la zona euro, ayer fue un día tranquilo en cuanto a la publicación de datos macro relevantes y declaraciones de expertos. Hoy conoceremos el Índice Armonizado de Precios al Consumo de Alemania, así como el Índice de Precios al Consumidor...

Encuentra más información con relación inteligentes en divisas