Archive

December 06, 2024
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HEW: Politics Doesn’t Derail Policy Rate

  • The rebound in US payrolls left a disappointing rise in the unemployment rate and the likelihood of another 25bp rate cut. Upwards revisions to UK employment and implicitly unit labour costs push the BoE the other way, reinforcing our call for it to hold rates.
  • Uncertainty around next week’s ECB decision has narrowed, partly because there hasn’t been a concerted effort to support expectations for 50bp. The data don’t justify it. Other announcements will come from Australia, Canada, Switzerland, Brazil and Peru.

By Philip Rush

November 29, 2024
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HEW: Euro Doves Face Reality

  • Resilient Euro area inflation and activity data (in the ESI) reiterated the need for ECB easing to be careful. Monetary policy divergence is priced far too widely, depressing EURUSD excessively. Schnable’s guidance was consistent with our contrarian pushback.
  • Next week’s calendar is quiet ahead of the usual pre-Christmas concentration. US nonfarm payrolls are the uncontested highlight, where we expect their rebound to be soft enough for the Fed to cut by 25bp in December.

By Philip Rush

November 22, 2024
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HEW: Misaligned Data Focus For FX

  • Euro weakness extended over the past week as markets discounted hawkish price and wage inflation. The market is excessively focused on activity growth rates and the PMIs rather than unemployment and the resulting underlying inflationary pressures.
  • Flash HICP for November may rise less than expected owing to base effects like German package holidays, but that is a temporary blip. Most other data have consistently warned against 50bp. The RBNZ’s likely 50bp cut again is an outlier.

By Philip Rush

November 15, 2024
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HEW: Trump Trade Trends Trump Value

  • The US dollar and rates kept trending higher over the past week, dragging UK yields up despite disappointing unemployment and GDP data. EUR weakness looks too stretched. US inflation data kept a December Fed cut alive, albeit still data-dependent.
  • Aside from Bank Indonesia's decision on Wednesday, it’s another quiet week ahead for monetary policy decisions. UK inflation’s uncontentious jump on regulated energy price changes is our main event, but we also await flash PMIs and final HICP data.

By Philip Rush

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