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UK Retail Sales the big news for UK today

Published: Friday 16 February 2018

  • UK-Germany talks in Berlin
  • US Dollar weakens but finds stability from positive economic data
  • No more hints at interest rate changes for Australia
By Mike Mistretta
UK Retail Sales is the key data release for the UK this morning. The Pound had strengthened in the run up to the results, but it seems that retail sales in the UK were much lower than expected for January 2018. There was just a 0.1% rise in sales month-on-month, below expectations of 0.5%. Growth year-on-year came in at 1.6%, still in the lower range of the forecast, but still the best figure since August 2017. We may see Sterling sell off a bit in response. So far it’s put paid to the Pound’s recent gains on the US Dollar.
UK-Germany talks in Berlin
Turning to politics, UK Prime Minister, Theresa May, flies to Berlin today for talks with the German Chancellor. The talks in Berlin come a day before the Prime Minister delivers a speech in Munich on her aims for security between London and Brussels after we exit the bloc. It is one of a number of keynote address by senior members of her Cabinet in the coming weeks as part of a charm offensive ahead of the next round of talks with the EU. Philip Hammond has been on his own charm offensive; yesterday he visited Sweden and is due to go to Holland, Portugal and Spain. 
Brexit progress?
There were reports yesterday that the European Union is considering softening its stance on censuring Britain during the Brexit transition period – positive news for the Pound – so markets will be keen to see any news that comes out of May’s meeting and the speech on Saturday, which could help boost Sterling strength.
US Dollar weakens but finds stability from positive economic data
The US Dollar remained the weakest currency of the day yesterday, but it found some stability after the US Producer Price Index (PPI) numbers beat expectations. Overnight, though, the US Dollar sell off continued and the GBP-USD exchange rate crawled back above 1.41 as global stock markets begin to move higher again. Investors have been reassured by a fall in the Wall Street Vix Index, the “fear gauge” that measures the one-month implied volatility of US stocks.
This afternoon, the US will release Import Price, Housing Starts and Building Permits, as well as University of Michigan sentiments. Close neighbours Canada will release Manufacturing Sales and International Securities Transactions, which are important gauges for the Canadian economy.
No more hints at interest rate changes for Australia
The Reserve Bank of Australia (RBA) Governor, Philip Lowe, told the Australian parliament today that the timing of any change in interest rate will depend upon the extent and pace of progress that they make in reducing the unemployment rate and having inflation return to target.
Good news for New Zealand’s manufacturers
Nearby, the New Zealand Manufacturing Purchasing Managers’ Index (PMI) rose to 55.6 in January, up from 51.2, indicating faster expansion for the sector and good news for the New Zealand economy.
One liners
I quit my job at the helium gas factory, I refuse to be talked to in that tone of voice!

Teacher: "What is the value of Pi?" Student: "Depending on what pie. Usually it is £4.99."

Take my advice — I'm not using it.

Today's Major Economic Releases

Market BST Data/Event Previous Expected
GBP 09:30 UK: Retail Sales -1.5% 0.5%
CAD 13:30 Canada: Manufacturing Sales 3.4% 0.2%
CAD 13:30 Canada: Foreign Securities Purchases 19.56b 19.18b
USD 13:30 US: Building Permits 1.30m 1.29m
USD 13:30 US: Housing Starts 1.19m 1.23m
USD 13:30 US: Import Prices 0.1% 0.6%

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