- Bigger EU budget called for
- German Industrial Production sharply higher
- Eurozone unemployment improvement expected
By David Johnson
Spotlight once again on UK government and Brexit negotiations
I think of Theresa May as the ‘Prim’ Minister because there is something so very proper about her. Her cabinet shuffle hasn’t been particularly neat and orderly though, but she has shed some of the critics of Brexit and gained a lot of suits few of us have ever heard of, but let’s hope they can knuckle down and get on with things.
Sterling traders were largely unfazed by the political shenanigans and the Pound ended the day a little stronger than where it started. It has continued to stay steady after this morning’s British Retail Consortium report showing retail sales in the UK rose 1.4% on a year on year basis in December. That’s quite a surprise when you consider just how much marketing was focussed on ‘Black Friday’ sales in November. The focus for most in the markets is still the Brexit negotiations and an Italian Minister’s suggestion Britain should get a much better trade deal that the one worked out for Canada. That kind of support is understandable and very welcome, but the Canadian deal took eight years to bring to signature. Oo-er!
EU asks for bigger budget
EU states need to be wary though; Jean Claude Juncker has called for an even larger EU budget, in spite of admitting they will lose €12 billion a year or thereabouts when the UK leaves. I suspect he will face some resistance there. Thankfully, German industrial production rose 3.4% in the year to December and that was much better than forecast, so, if Mrs Merkel can get a government built, the Germans can cover the shortfall. We will get the Eurozone unemployment rate later this morning and a slight drop to 8.7% is forecast. That is still painfully high, but has been falling since the peak in 2013 when it was over 12%. The Euro is still trapped in a tiny range against the Pound and the USD.
US Dollar starts today stronger
For its part, the US Dollar is a little stronger this morning after Atlanta Federal Reserve President Raphael Bostic called for three interest rate hikes in 2018. That is very hawkish compared to some of his fellow board members. A lack of substantial US data today, should see the status quo maintained for now at least.
Australian employment drop could help interest rate concerns
Australian job adverts fell 2.3% in December and the Reserve Bank of Australia must be a little relieved that this might dampen wage price inflation at a time when they clearly have concerns over any interest rate hike. The Sterling – Australian Dollar rate remains seven cents below the December highs.
The real Easter bunny?
And I am shocked by a story in the Daily Express. They report that a rabbit in Cornwall has developed a distinctive cross on his head. The suggestion is that he may be a reincarnation of a certain Jesus of Nazareth, but that isn’t the shocking part. What shocks me is that there is no mention of the words, ‘hot cross bunny’ anywhere in the article. Have newspapers sacked all the pun teams, or what?