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Sterling remains strong ahead of employment and earnings data

Published: Tuesday 17 April 2018

  • Reserve Bank of Australia more upbeat on Australian economy
  • Chinese economy slows again
​​By David Johnson

Chinese economic growth slowed again; a 1.4% quarterly growth figure is down from the 1.6% figure in Q4 of last year but the annualised rate is just about 6.8% still. However, industrial production in China is also slower at 6.0% compared to the 7.2% we saw in February. That sent a shudder through the countries that supply China and their currencies quivered a little.
One of those currencies is the Australian Dollar. China is Australia’s largest export market after all. Aussie traders were also able to get the views of the board of the Reserve Bank of Australia. The minutes from their April meeting showed they are rather more upbeat about the Australian economy than they have been of late. In spite of the Reserve Bank of Australia’s optimism, the Australian Dollar weakened again.
Sterling had another positive day in spite of a lack of UK data. Today is a very different picture though. We expect average earnings to be above consumer inflation and we expect the unemployment data to be positive, although the unemployment rate should stay around this very strong 4.3%. Sterling is holding station above $1.43 and €1.15 and may move on again if the data is any more positive than the forecasts suggest.
On the other side of the channel, we expect the ZEW economic sentiment index to reflect a degree of pessimism in Germany and that ought to further weaken the Euro.
As for the US data, well, all the forecasts are positive. A rise in housing starts and building permits are envisaged. An element of USD strength is likely if those forecasts are true.  However, speakers from the Federal Reserve have been espousing all manner of conflicting views over the past few days, so they are keeping traders guessing.
Today’s Canadian Data is also forecast to be upbeat; manufacturing sales are expected to have bounced back from last month’s dip. The Canadian Dollar is good value right now.
And, I have a number of news alerts set in Google and elsewhere. They alert me to news about the markets but also about strange stories for the footer of this report. I am starting to wonder whether my definition of ‘funny news’ is the same as other people though. Under ‘funny news’ I got a report that spoke of a Japanese man who is being held by police over a number of body parts in his apartment. I am hoping someone has tagged that incorrectly or maybe I just need a lie down.
Back on leave
A sailor came home from a secret 18 month mission only to find his wife with a 2 month old baby. He was furious and determined to track down the father to extract revenge.

"Was it my friend Sam?" he demanded.

"No!" his weeping wife replied.

"Was it my buddy Jim then?" he asked.

"Hell no!!!" she said even more upset.

"Well which one of my no-good friends did this then?" he asked.

"Don't you think I have any friends of my own?" she snapped.

Today's Major Economic Releases

Market BST Data/Event Previous Expected
GBP 09:30 UK: Average Earnings Index 2.8% 3.0%
GBP 09:30 UK: Claimant Count Change 9.2k 13.3k
GBP 09:30 UK: Unemployment Rate 4.3% 4.3%
EUR 10:00 EU: German ZEW Economic Sentiment 5.1 -0.8
CAD 13:30 Canada: Foreign Securities Purchases 5.68b 7.24b
CAD 13:30 Canada: Manufacturing Sales -1.0% 1.0%
USD 13:30 US: Building Permits 1.30m 1.33m
USD 13:30 US: Housing Starts 1.25m 1.24m
USD 14:15 US: Capacity Utilization Rate 78.1% 77.9%
USD 14:15 US: Industrial Production 1.1% 0.3%

For more information, infographics and the latest currency insights, visit www.halofinancial.com/news