More poor German data weakens the Euro

Eurozone retail sales were in positive territory last month but that particular dataset has a hint of the ‘fiddlers elbow’ about it, so no one paid any attention. This morning is German industrial production data showed a 4% drop in August. That comes a day after the release of German factory orders which were down 7.7% in August. It doesn’t paint a rosy picture but the same supply chain problems are being cited as the cause. We will see the minutes from the last European Central Bank meeting at lunchtime today and we will have several speakers from the ECB later in the day. Hopefully, that will provide some clarity on the central bank’s plans in light of the recent production problems and ongoing covert concerns. The GBPEUR rate opens the day at the top end of the now-familiar €1.1650 to 1.1750 range.

Energy prices shifting USD

The EURUSD rate bottomed out at $1.1530 yesterday has climbed just under half a cent this morning’s $1.1570. Of course, the Euro is only half the story here. An unexpected 2.346-million-barrel rise in US crude oil stocks weakened the US dollar a little overnight. That was counterbalanced a little by Russia announcing it would increase gas supplies to Europe to calm the markets. Very magnanimous, I’m sure.

Dollar awaits weekly jobless data

The GBPUSD rate has also risen but is still trapped below $1.36 at the time of writing. This afternoon brings the release of the weekly jobless claims data. This data has been somewhat erratic of late but this set comes a day ahead of the monthly employment report, so it will be watched even more closely than normal. Anything more than 350,000 fresh claims will be a worry for the US markets and may soften the expectations of tighter US monetary policy in 2021. The USD may also benefit if the US debt ceiling is reset by agreement. That is always a tricky politicking thing.

Sterling is trading in a sideways pattern despite a rise in the Halifax house price index of 1.7% in September; the strongest rise in this index since July 2020. The Prime Minister’s speech at the Conservative Party Conference was more decisive than he might have hoped but there is news that the Scottish First Minister’s drive to call a 2nd independence referendum is outside her remit. So says the Supreme Court. She will need Westminster’s approval for a vote and that is highly unlikely in the current climate. That ought to strengthen the Pound as it maintains the unity of the UK.

Asian positivity boosts AUD an NZD

A hope of a conclusion of the US debt ceiling and a bit of positive equities market activity in Asia has boosted the Australian Dollar this morning. GBPAUD has been down to test the AUD 1. 8625 level again. If this pair drops below AUD 1.86, further losses are very likely’ especially if the buyers who supported the Pound at AUD 1.8575 in early September are absent. The next challenge for the AUD comes overnight when the Reserve Bank of Australia publishes its financial stability review. Then Monday will be a concern because the Chinese market, which has been on holiday for a week, comes back into play.

After a New Zealand rate hike early yesterday, the NZD weakened but it finding some buyers again today. As with the AUD, positive vibes from the Asian shares markets have had a positive impact on the region’s currencies. So, having peaked at just above NZD 1.9700 yesterday, the GBPNZD rate is down to NZD 1. 9605 this morning. There is scope for another half a cent on nothing more than momentum.

That’s about all there is to report today. Have a super Thursday.

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