- Brexit - blah blah blah
- Chinese international trade ramps up
- US oil inventories awaited
By David Johnson
Sterling suffering from Brexit talk
Sterling is looking a bit limp even after very positive UK house market data. The Halifax housing index showed UK home prices rising 3.3% on the year and that’s not to be sniffed at when we are being told on an hourly basis how awful the British economy is. The problem with the Pound is the dreaded ‘B’ word. Yes, Brexit rhetoric is everywhere. The EU is getting all mardy over the US’s trade tariffs, but talking tough on the UK facing tariffs after Brexit. Hypocrisy or what? UK cabinet ministers and the first minister for Scotland are all manoeuvring to gain advantages over the negotiations with Brussels and it seems generally agreed that a ‘no deal’ Brexit would be troublesome for all involved. Either way, the Pound is a tad weaker as all these machinations are playing out.
Strong Chinese results spell good news for Australia and Asia Pacific markets
Overnight we had very strong import and export data from China. Imports were up 27.2% and export up 12.2%; both stats massively above market expectations. That is good news for countries that supply China; Australia, Japan and others. It is also a good sign of strength in the global economy and goodness knows we need some good news on that.
Chinese economic strength weakens USD
That news weakened the US Dollar a little, in a day that offers little in the way of US data. The EURUSD rate is above $1.16 again, but Sterling is so embattled that the GBPUSD rate remains below $1.30. The only potentially market moving data we will get from the US is the oil inventories report. The markets are forecasting a sizeable drop in oil stockpiles and that generally strengthens the crude oil price, ergo the US Dollar tends to weaken. This is due to the fact that, as commodities are traded in USD, a rise in the underlying asset tends to weaken the currency in which it is traded. I could write you an essay on it, but I am sure you would be bored.
Volatility ahead for New Zealand Dollar
Then it is all quiet on the Western and Eastern fronts until the Reserve Bank of New Zealand makes its interest rate decision at 10:00pm UK time. No change is forecast for the 1.75% base rate but the statement that accompanies the decision is the key to the future path of the Kiwi Dollar. Some volatility is very likely.
Breakfast breakthrough, or midnight snack?
And if you started your day with cornflakes, then you’ll be delighted to know that they were invented by William Kellogg on this day in 1894. He thought they would be good for the patients at Battle Creek Sanitarium in Michigan. I guess it was something at least; the patients were on a strict vegetarian diet and were banned from using alcohol, tobacco or caffeine. Who would have thought they would still be the staple bedtime diet of millions of ‘dirty stop outs’ as my mum used to call us when we stayed out late. I guess you would more likely call it ‘out out’ these days.
An insecure middle manager in a large company has had enough of all the jibes and backchat from his staff. So he decides to hang a sign on his door which says, ‘I am the boss and don’t you forget it!’
He is quite pleased with himself because he gets no insolence from the staff all morning. He goes to lunch with a spring in his step. When he gets back to his desk, someone has added a Post-it note to the sign which says, ‘Your wife called to say she wants her sign back!’