USD strengthens – Dow and S&P at record highs

Investors in the US are more optimistic about the future than the Federal Reserve. I say this because, whilst the Fed is talking about modest growth, flat interest rates and loose monetary policy for an extended period, the Dow and S&P indices his record highs last night. An easing of Treasury prices accompanied that. For its part, the US Dollar rate is down three quarters of a cent to $1.3720 against the Pound but has only gained a third of a cent against the Euro. The EURUSD sits at $1. 1960 this morning.

Part of the US Dollar strength will stem from nervous investors watching the escalating tension in Ukraine and the tussle between the US and China over sanctions. Nervous investors tend to buy the US Dollar. We can validate that sentiment through the $30 rise in an ounce of gold in the last 24 hours.

GBP and EUR caught by lack of trade deal NI agreement

Sterling, and the Euro to some degree, are being hampered by the lack of progress in continuing UK-EU talks on the conclusion of Brexit. The talks broke up without an agreement on the Northern Ireland border or one on trade. I am sure they will talk some more, and a deal will be done eventually, but it does hang a cloud over the fate of the Pound and the Euro.

We will see Eurozone inflation data today, but that won’t trouble the score sheets, and we’ll get a speech from the Deputy Governor of the Bank of England, but that is unlikely to shuffle the pack.

Chinese data barrage mostly positive

The overnight news was a swathe of data from China. It was a bit of a mixed bag, with GDP growth missing the forecast but still posting a healthy 18.3% rebound on the year and industrial production growing a rude 14.1%. That was below the forecast and less than half the March level, but most countries would give their right arm for that kind of growth. China’s unemployment rate dropped to 5.3%, and retail sales outstripped the forecasts at 33.9% on the year.

All of that excitement boosts the economies’ prospects that supply and rely on the behemoth Chinese economy. For example, the GBPAUD rate is down to 1.7750, GBPNZD is below 1.92, and the GBPJPY rate dropped half a Yen overnight.

This afternoon is dominated by housing market data from the US and Canada. The forecasts are for a healthy rise in US building permits and Canadian housing starts. If so, both the Canadian and US Dollars should strengthen in later trade. So be ready for that.

And then it’s the weekend. That brings the sadness of the Duke of Edinburgh’s funeral, attended by 30 guests and watched and commented on by a million’ experts’. Well done, Your Majesty, for insisting on Mourning Suits; it gets around the embarrassment to the Royal Navy over Andy’s Admiral costume and the fact that Harry doesn’t have a rank any more. Ever the diplomat Ma’am.

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