Will Putin go along with US/Ukraine ceasefire suggestions?

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.

UC CPI inflation came in lower than expectations yesterday which sent USD lower although the move was short-lived   GBPUSD reached a high of almost 1.2990 while EURUSD climbed to 1.0930.  Both pairs are off those highs now, EUR has certainly come off worse, perhaps due to tough trade talk from both US and EU, perhaps also due to Putin’s reported reluctance to agree to the ceasefire that has been discussed by US and Ukraine.  Indeed, Putin has stepped up efforts to take back control of the Kursk region that Ukraine has held for some months.  A US team are heading to Moscow for talks, Trump has threatened Russia with serious consequences should they not play ball, but as I have said before, the days of US being able to tell other nations what to do have passed.  I think we’ll see Russia stepping up attacks on Ukraine before any lasting peace deal is agreed.

With Euro dropping fast than GBP, GBPEUR is well off recent lows which came in around 1.1835, now trading at 1.1915.  France have lowered their 2025 growth forecast from 0.9% to 0.7%, they also see inflation coming in weaker than expected, partly due to lower regulated electricity prices.  Interesting given I have just received a message from British Gas confirming a near 10% price increase for my gas and electricity.  Thanks for that.   

The relative GBP strength comes just about two weeks before OBR publishes their latest forecast for the UK economy.  They are highly likely to confirm Chancellor Reeves will miss her key fiscal targets by well over £1bn, a number that would reportedly be almost doubled if more current borrowing costs were used.  Expect Reeves to announce spending cuts in an effort to plug the gap.

BoC cut rates by 25bps to 2.75% yesterday, a move that had been widely expected.  This is the seventh cut in the current cycle.  BoC said they are concerned about slowing domestic demand in Q1 and also worry that the trade conflict could disrupt the weakened economy further and also impact the jobs market.  Overall, it’s a pretty dismal outlook but Macklem was clear that the Bank will need to tread carefully with regards to further rate cuts as they will likely need to find a balance between lower growth and the risk of rising inflation.  USDCAD trades now at 1.4385, tariff talk still the driving factor here for the time being.

I mentioned the North Sea tanker collision earlier this week, questioning whether the collision was an accident or deliberate.  I think I have read somewhere that most of the crew of the Portuguese registered Solong were Russian.  Including the captain who has since been arrested.   Naval experts have said it is a mystery how the Solong managed to hit the Stena Immaculate given the sophisticated equipment on board ships these days.  Curious stuff.

In sport, Arsenal and Aston Villa are both through to the quarter finals of the Champions League.  Arsenal have been drawn against Real Madrid, Villa will face PSG.  At this stage of the tournament there are no easy matches, there are eight strong teams remaining, but no one wants to face Real Madrid.  There was some controversy in the Real v Atletico match yesterday.  It went to a penalty shoot out that Real won after Atletico had one of their penalties disallowed due to the ball being hit twice by Alvarez when taking his spot kick.  He slipped as he was taking it and VAR said he kicked the ball onto his standing foot before it hit the back of the net.  The rule is correct but I have seen the video and I didn’t think it conclusive.

Spurs are in action in the Europa League this evening as they attempt to overturn a one goal deficit from the first leg.  Spurs are favourites at the bookies to both win and qualify. I wish I shared their optimism.  Man Utd, struggling like Spurs in the league this season, are also playing in the Europa League this evening against Real Sociedad, scores level after the first leg.  Chelsea will be hoping to retain their one goal advantage in the Europa Conference League match this evening against Copenhagen.

US PPI inflation is the main economic release out today, markets are expecting a slight drop from last month as we saw with CPI yesterday.  UK GDP is out early tomorrow morning but trade tariffs are still very much the main talking points for the time being.

Have a great day…

-  09.50 ECBs de Guindos speaks

-  10.00 EU industrial production

-  12.30 US PPI, initial jobless claims

-  21.30 NZ business PMI

-  07.00 UK GDP

-  07.00 German HICP