Gaza's fragile peace is broken as Israel launches fresh attacks

Good morning

US data releases will be one hour earlier at 12.30 or 14.00 london time due to the US clock changes that took place at the weekend. 

In addition, FX option expiries will be 14.00 london time, not the usual 15.00 london time.

This will be until Sunday 30th when we change our clocks in the UK.

Poor US retail sales data yesterday gave trades a reason to start the week selling US dollars.  GBPUSD traded to a high of 1.2995 and EURUSD hit 1.0930 in the afternoon.  Equities were generally higher which was perhaps a slight mystery given the increased likelihood of a US slowdown but I guess they have come low enough that the odd correction is only reasonable.

Despite the weaker USD move running out of steam yesterday, as I type we are not only retesting but breaking those lows, GBPUSD now ticking above 1.3000 and EURUSD to 1.0940.  GBPEUR is 1.1875, just a shade lower than this time yesterday. 

Israel have struck targets in Gaza once again as a near two months of some sort of peace is broken after suggestions that Hamas was preparing an attack similar to that of 7th October.  Meanwhile there are reports that an Iranian ship has been sunk in the Red Sea by US forces, the suggestion being it had been helping Houthis target US vessels.  Trump has made it clear that Iran will face dire consequences if Houthi attacks on US military and shipping in the Red Sea doesn’t stop.  The lower USD move is a theme that has been running for some time now so it shouldn’t be a surprise.  However we tend to see a stronger USD when there is increased talk of war or conflict, we are not seeing that for the time being. 

Gold prices have made new highs around $3,025/oz, perhaps the looming threat of a new phase in the Gaza conflict is having an impact although I strongly suspect data will soon show that China has been continuing with their purchases in recent weeks and months.  I’m thinking there is more upside to be seen here.

Trump is said to be speaking to Putin today about peace in Ukraine and how best Ukraine’s assets can be divided to suit everyone, possibly other than Ukraine.  There is even talk Trump will officially recognise Russia’s control over Crimea.  Trump has also said he could well be hosting China’s Xi in Washington soon, those comments come as China conduct more military drills around Taiwan.

Canada’s Carney has been visiting Europe to strengthen ties.  Both Canada and Europe have been hit with Trump tariffs and it shouldn’t be a surprise that affected nations look to join together in order to combat the trade threat from the US.  Carney had strong words for Trump, saying they will not speak until disrespectful comments about Canada stop.  Carney has acknowledged that there is a limit to how much Canada can match US tariffs given the US economy is so much larger.  He is waiting to see what Trump does on 2nd April before any response is made.  On the subject of Canada, the latest Canadian inflation numbers are released later today, markets looking for a slight uptick from last month.  USDCAD continues to trade lower, currently 1.4275,

Overnight we’ll have the BoJ rate meeting.  There has been plenty of talk about a possible rate rise but it is not expected to be announced at this meeting.  Indeed, despite USD being generally lower, USDJPY is over 300 pips higher than last weeks lows, just a whisker away from 150.00. 

In other news, China’s electric car firm, BYD, have unveiled a new charging system much faster than Tesla’s superchargers.  The system could give a car 250 miles of range in five minutes, which would make stops no longer than refilling with petrol and as such make electric vehicles all the more practical.   The news won’t help Musks Tesla which has seen stock prices trade down from around $490 in December to a low last week of around $218.  A lot of that is coming, apparently, from political backlash against Musk and there is even talk he may be forced to resign from the board. 

I like electric cars and think with larger range and quicker charging they offer everything one needs to travel in style and comfort.  Remember we are still in the very early days of electric vehicle technology. However I’d love to know what the limits are for the national grid.  If everyone had superfast charging cars, would the grid be able to cope?  This is all on top of the high energy demands for data centres and AI infrastructure.  Wind power won’t suffice here.  That idea of net zero is looking less and less likely.

Finally, congratulations to Rory McIlroy for winning the Players Championship yesterday, on St Patricks Day of all days.  He has struggled to win a tournament for some time now, the Players isn’t a major but it will set him up well for the Masters which takes place at Augusta next month.

Have a great day…

-  10.00 German ZEW

-  12.30 US housing starts

-  12.30 CAD CPI

-  13.15 US industrial production

-  23.50 Japan trade

-  03.00 BoJ rate announcement

-  06.30 BoJ press conference