- Sterling slips on profit taking
- US Dollar improves after flip-flop US announcements
- US income and expenditure data awaited
- New Zealand trade deficit expected to narrow
By David Johnson
Sterling on the rise…
Sterling had a very volatile period last week as the strength of the UK economy came back into focus and the US Dollar weakened for a number of reasons. Sterling flirted with €1.15 and $1.4350 before correcting on profit taking. These are levels we haven’t seen against the USD since the immediate aftermath of the Brexit vote. €1.15 has proven to be an immovable object for the Pound since May 2017. The trend for the Pound remains an upward one and I have little doubt these levels will be breached at some stage in the near term.
US Dollar weak and could drop further
The Euro also tested new ground against the US Dollar as it peeped above $1.25 before the profit takers dropped it back again. That is a level not seen since 2014, so it is significant. The flip-flopping of the US authorities over whether they want a strong or weak USD has created some uncertainty amongst traders. However, stronger (albeit below market forecasts) Gross Domestic Product (GDP) data and the fastest growth in US Durable Goods Orders in six months, helped the USD stage a comeback of sorts in late trade on Friday. Today’s release of US personal income and expenditure data will be the next test. The forecasters seem to believe income will be down a tad, but spending will rise by a similar amount. We’ll leave it to the Federal Reserve to pick the bones out of that but, tentatively, that kind of mixed data ought to weaken the USD again.
New Zealand Dollar could strengthen overnight
That is it for the very light data docket in UK trading hours, but we’ll get trade balance data from New Zealand overnight. A distinct narrowing of the trade deficit is forecast. If that proves to be true, we can expect strength in the NZ Dollar. That’s good news for NZD sellers, but not so for NZD buyers, who may wish to pre-empt the data is they are risk averse or place automated orders if they prefer.
Oh, the irony…
And Irony appears to be lost on the protesters who stormed a café dedicated to the memory of Sir Winston Churchill, chanting that the man was ‘Imperialist scum’ and 'a racist'. Those who did so at the Blighty café seem to miss the point that, were it not for Sir Winston and the amazing people of his very special generation, they wouldn’t be allowed to protest against anything for fear of a firing squad. So enjoy your freedom to protest, tedious people, even as you entirely miss the point… and the irony.