The dollar made a strong comeback yesterday and is off to a solid start this morning. Perhaps it’s too soon to call a turn, but this could be a return to trend. For starters I would need to see EUR/USD below 1.11 and GBP/USD back down below 1.40 before raising my conviction level. The pace of the decline in cable so far and we could see that by the end of the week.
Later on today we have the MPC in the UK, we don’t expect any surprises with all members voting for rates to remain on hold. We also get Eurozone and US CPI numbers, and some consumer confidence data in the US. It will be interesting to see if we get more positive surprises.
Nigeria appears to be on a borrowing binge, which raises fears that we are going back to the bad old days. There’s nothing wrong with borrowing of course, as long as the money is used effectively. That’s the open question at the moment. It’s been a less than auspicious first year from President Buhari, the jury is still out. Inflation is rising, there are queues at petrol stations in Africa’s largest oil producing nation. Things need to change.
Finally on Friday we’ll get Q1 GDP numbers out of China. That alone could alter sentiment one way or another. A strong number could see the dollar continuing to rally, and it would certainly see equities push up to new year-to-date highs. Watch this space.
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