- UK inflation expected to pick up
- Massive US data diary to liven up the afternoon
By David Johnson
Australia affected by gold prices
Australian average wages rose at a faster pace in Q2, but consumer sentiment for August slipped a little. The Australian Dollar was left to wriggle in a small range after the data. Curiously, gold prices have fallen to their lowest level since January 2017. That is odd because, usually, when there is political or economic tension in the air, investors seek out gold investments as a safe haven against the woes of the world. Whatever the reason, this will damage income from gold exports which make up something like 6% of Australia’s exports.
UK eyes on inflation data
After yesterday’s very positive UK data, the markets will focus on inflation data today. With unemployment at a 30 year low, wages growing at 2.7% and very high levels of job vacancies, there is undoubted upward pressure on wages levels. This inflation data will, through the RPI index, set next year’s rail fare increases and that (speaking as someone who can’t afford to trust Southern Rail to ever arrive on time) is a crime, because the Retail Price Index (RPI) will most likely be 3.5% or thereabouts. Consumer Price Inflation is likely to edge up to 2.5%, narrowing the disposable income gap. If the forecasters have used their accurate calculators, the Pound should steadily gain today.
Public holiday means break for most of Europe
European data is notable by its absence today, but it is Assumption Day, and therefore a public holiday in many European countries today. The Euro did recover a little yesterday, as mentioned in yesterday’s report. The plateauing of the Turkish Lira (TRY) helped a lot, but the threat of further weakness still hangs in the air. The Turkish President is in a quandary. The normal course of action for a central bank faced with a run on its currency is to raise interest rates, but Erdogan has demonised high interest rates in the past, so that is probably not an option. Tighter monetary control may come in a different guise but, can I say that not buying US technology is probably a futile gesture if he wants to damage the American economy.
US announcements make up for dearth of international data
The US diary more than makes up for the lack of news elsewhere. We are awaiting (deep breath)…Retail Sales, Non-Farm Productivity, Unit Labour Costs, Industrial Production, Business Inventories, Crude Oil Inventories, and Uncle Tom Cobley an’ all. It could well be a very lively afternoon.
The forecasts are very mixed, but Retail Sales looks set to be uninspiring, whilst unit labour costs may be lower and productivity is expected to be very strong. The dark horse here is the Crude Oil Inventories. A sizeable drop is forecast, which suggests future demand; and that could strengthen oil, which tends to weaken the US Dollar. If you followed all that, as Mr Kipling said, ‘you're a better man than I am, Gunga Din! That’s the writer and not the cake maker, BTW.
And anyone who has ever stood penned into a stadium to watch specs in the distance playing music can thank this day and the Beatles for the experience. On this day in 1965, the Beatles played at Shea Stadium in front (and to the side) of 60,000 fans. It was the first stadium event for a music band and it spawned so many other events. I am sure even the Cheeky Girls played to a stadium at some point, gawd love 'em.