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Make the most of Australian market movements tonight

Published: Wednesday 14 February 2018

  • Sterling slips on UK inflation drop
  • Eurozone Gross Domestic Product (GDP) awaited
  • US inflation likely to disappoint, whatever the number
By David Johnson

Happy St Valentine’s day everyone. I hope you had heaps of smooshy lovey-dovey cards on your doorstep this morning and hopefully, a few that you didn’t send to yourself.
Not a happy Valentine’s for the UK
It follows a poor day for the Pound, after UK inflation dropped by more than expected. The Consumer Price Index (CPI) figure was forecast to have dipped just below 3.0%, but the actual number was just 2.7%. That casts doubt on the Bank of England (BoE) having to raise interest rates any time soon; hence the sell off as investors seek yield elsewhere. There is a distinct lack of UK data today, so, barring anything interesting being said about Brexit, the Pound will tread water. 
A busy day for the Euro
The Euro had a good day at the office, in spite of the lack of EU data, but that may not be sustained. Bridgewater, the world’s largest hedge fund manager, with $160 billion under management, has positioned itself to benefit from a drop in the value of some of the largest conglomerates in Germany. Apparently some $14 billion in ‘short’ positions have been placed and that is a very negative on the German economy. The negative view from Bridgewater could be offset by Eurozone GDP data, due this morning. An annualised rise is forecast from last quarter’s 2.6% to 2.7% but we are also expecting a slowdown in industrial production and that would unsettle the markets. So the Euro is in for a busy day.
Much-hyped US inflation data today
Today’s big news is the US inflation data. This release has been hypoed up to the point where it cannot possibly live up to – or down to – the market expectations. A drop from 2.1% to 1.9% is the most likely scenario and that would weaken the US Dollar somewhat. It’ll fall further if US retail sales show a smaller than 0.2% rise on the month to January.
Make the most of Australian activity overnight
Overnight tonight we get a swathe of data from Australia, including unemployment and inflation data. We are not expecting much change on these, which means that, if there are large movements in the data, the Australian Dollar will be volatile. This is a great opportunity for automated orders on either the buying or selling side of the market. These can react in an instant and so will not miss the volatility even if we do because we are sleeping off a Champagne headache. 
A very British Valentine’s Day?
And, for those who need a very British Valentine’s Day quote, may I humbly offer the following. “Annoyingly, I like you more than I had originally planned.” I saw it on a card yesterday. I tutted… obviously. 
Some other Valentine’s Day card words that don’t quite cut the mustard…
  • You make me as happy as Donald makes Melania
  • I generally hate other people… but you’re OK
  • You are less rubbish than most people
  • I love you more than Piers Morgan loves himself
  • There is no one else I would rather lie next to while I check out my phone apps
  • I know I love you because you are the one I text when I am drunk
  • I love you so much, I would let you see my browsing history
  • I’ve run this by HR and they say it is OK for me to wish you a Happy Valentine’s Day as long as I don’t go in for a kiss without asking first… in writing.

Today's Major Economic Releases

Market BST Data/Event Previous Expected
EUR 10:00 EU: Flash Gross Domestic Product 0.6% 0.6%
EUR 10:00 EU: Industrial Production 1.0% 0.1%
USD 13:30 US: Consumer Price Index 0.1% 0.3%
USD 13:30 US: Core Consumer Price Index 0.3% 0.2%
USD 13:30 US: Retail Sales 0.4% 0.2%
USD 13:30 US: Core Retail Sales 0.4% 0.5%
USD 15:30 US: Crude Oil Inventories 1.9m 2.8m

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