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Aussie business confidence down unexpectedly

Published: Tuesday 10 July 2018

  • Sterling slips marginally on UK politics
  • UK Gross Domestic Product (GDP) to guide Sterling
​​By David Johnson
All change in the cabinet then. Boris resigns and Raab comes into the Foreign Office whilst the knives are out for Prime Minister May and the Brexit deal looks softer than a cotton wool kitten. The rebels in the conservative party don’t think they have enough support for a ‘vote of no confidence’ in the Prime Minister  and maybe that is why Sterling seems to have taken most of this in its stride.
The Pound is half a cent lower against the Euro and a cent lower against the USD but that is entirely within its recent ranges. The lack of UK data yesterday probably has a lot to do with that. The British Retail Consortium released data overnight that showed 1.1% growth in like for like high street sales. That is sharply lower than the May data but still in positive territory. This morning most likely brings a similar pattern in UK construction output but industrial output looks set to be a little stronger. We will also see a GDP release from National Institute of Economic and Social Research (NIESR). That is expected to be in line with the previous month’s data at a quarterly 0.2% growth rate.  Sterling will still be susceptible to political fallout but this data, if in line with the forecasts, will steady the Pound.
Eurozone data today is a little more scattered. We have already seen poor French industrial production data and the markets are awaiting the ZEW Institute’s Eurozone economic expectation survey results. The forecasts are not good and that could put pressure on the Euro.
We heard overnight that Australian business confidence was softer in June when the markets were expecting a gain. That weakened the Australian Dollar a little.
This afternoon brings job opportunity data for the US plus the Federal Reserve’s Red Book. That is a retail sales monitor of around 9,000 stores across the US, so a decent indicator of consumer sentiment that the Federal Reserve watches closely. The USD may react.
This afternoon also brings Canadian housing market data and, with a potential interest rate hike this week from the Bank of Canada, that will take on extra significance.
Oh and if you thought your friends and family were taking the World Cup seriously, there are reports from Russia that a couple are getting divorced after they fell out over who is the better footballer, Ronaldo or Messi. At the risk of exacerbating things, might I offer the name Kane? I guess that’s not helpful at this time.

A man arrives at the Pearly Gates and the angel on the door says, “Well this is a tricky one. You haven’t done anything good, but you haven’t done anything bad either. We tend to look on the positive side of things, so if you can give me an example of something you have done that will amaze me, I will let you in.”
“Well,” says the guy. “What about the time I was driving down the road and I saw some bikers threatening a young lady in an alleyway. I stopped and confronted them. I walked up to the biggest biker, slapped him on the back of his head and said, ‘You need to leave this young lady alone, or I’m going to beat the hell out of you!”
The Angl looks impressed but reads down his list and says, “I’m sorry, we don’t have that on our records. When did it happen?”
“About three minutes ago,” says the guy.

Today's Major Economic Releases

Market BST Data/Event Previous Expected
GBP 09:30 UK: Gross Domestic Product 0.3% 0.3%
GBP 09:30 UK: Manufacturing Production -1.4% 1.0%
GBP 09:30 UK: Goods Trade Balance -14.0b -11.9b
EUR 10:00 German: ZEW Economic Sentiment -16.1 -17.9
CAD 13:15 Canada: Housing Starts 196k 195k
CAD 13:30 Canada: Building Permits -4.6% 0.1%
USD 15:00 US: JOLTS Job Openings 6.70m 6.88m

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