Just as it did last week, the week belongs to the UK (economic data-wise)..
| GBP
| It has been a very confusing morning..
Since Trump's cancelled strikes on Iran and supposed Iran talks around mid-morning, the Pound has regained some of the lost ground it gave away Friday afternoon (around 0.4% so far).
Sterling suffered a sell-off Friday afternoon over UK finance fears.
£-€ went from 1.16 mid-market to 1.1520 with £-$ going from 1.3430 mid-market to 1.33 Friday pm. These were swift drops following the concerning UK's government borrowing number for February, which saw the debt on interest payments more than double from a year ago (£5.5BN to £13BN).
There are so many moving parts at the moment that we are literally bang in the middle of the 'it's impossible to call what happens next' environment. This is where hedging can become your best friend if you have a large payment in the pipeline.
Last week the BoE voted unanimously to hold interest rates, something that was not scheduled to happen just 3-weeks ago. This week, it's the UK again that dominates the economic calendar. First up is the preliminary PMI result for March and we think this will create volatility tomorrow as it's the first economic look into things since the Iran-US war.
Wednesday's inflation report is probably the main headline for the week and is the result for February. The hope is for no change MoM, but any deviation again will see rates move. Retail sales have been kind for many months now so let's see if that trend continues on Friday.
An interesting week ahead that's for sure.
EUR
The Euro-Zone offers up important PMI figures tomorrow, but apart from that it's the sitting duck role for the Euro this week. One thing to note is the European stock market is on track for the worst month since the pandemic with most indices down by 10% currently.
USD
Market analysts are suggesting the Iran-US war has reached a point where Trump no longer has the appetite to keep it going and here's why;
- Oil has skyrocketed
- The stock market is down
- Inflation fears have squashed interest rate cuts
- Bond yields are higher
- The USD is stronger
Literally every single one of these points are the exact opposite of what Trump wants. It has been quite clear so far that when Trump escalates, Iran leverage the Strait of Hormuz and the above is the result.
When markets opened today we saw global stocks down by 1% on the day, gold down by 5%, oil and the USD up. Since Trump's earlier pivot and ceasefire, stocks are now up by 1.5% on the day, gold is down by only 1% now, oil has tumbled 10% and the USD has headed lower also.
Whether this is a TACO (Trump Always Chickens Out) trade or not, it's clear what the market wants and how it will be responding if Trump goes against it. In the meantime, Iran's media have denied there have been any talks with the US..
Please check out the main events of the week below..
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