- Poor German business sentiment expected
- US political antics could overshadow data
By David Johnson
The US President has tweeted that his meeting with the North Korean leader has gone ‘better than anybody could have expected’. I am still laughing about the comments of one US senator, who, when asked what Trump should do at the meeting, replied, “Get some smart people into the room”. None of this has altered the US Dollar to any great extent, although the American currency is a little stronger this morning.
Sterling has a sorry start
Sterling starts the day lacking friends. It suffered when the UK trade deficit was shown to have widened to £14 billion in April and as the National Institute of Economic and Social Research (NIESR) estimated the UK economy to have grown by just 0.2% in the three months to May. The forecasters had suggested 0.3% as a likely outcome. So the Pound is at a very low ebb ahead of this morning’s UK employment data. The forecasts for this report are quite positive. Growth in employment is expected, but the unemployment rate looks set to remain at a very healthy 4.2%. Average earnings growth may have slowed a little to 2.5%, though. However, as long as inflation continues to realign around 2.0%, that still increases disposable income. Sterling may recover some of its composure as the morning progresses if these forecasts are accurate.
Storm clouds are brewing…
The head of the International Monetary Fund (IMF) is warning that there are storm clouds above the global economy and we are seeing some of that in this week’s data. Whether you trust IMF forecasts or not is another matter entirely. They don’t have a good track record for that…
Some of those looming clouds were seen overnight, though; Australian business confidence was well below expectations and Australian home loans continue to decline. The Australian Dollar is a tad weaker overall, but the weakness of the Pound overwhelmed that.
Euro could be hit by German sentiment results today
The Euro may be hurt today by expectedly poor German business sentiment indices from the ZEW economic institute. The forecasts predict sharp drops in all three factors of this survey; economic condition, sentiment and expectations. Little has been made of the effects Brexit may have on the European economy, but we are starting to see nervousness in some of these sentiment indices. Mr Barnier, please take note.
US political antics could overshadow data
US data today comes in the form of Consumer Price Inflation. A small scale rise is forecast, but events in South Korea are more influential, perhaps, as well as the fallout from the tetchy G7 summit and the Franco – US spat. It seems Macron’s new BFF didn’t like the tone of Macron’s communiqué after the event. Who would have thought that the US President could be petulant? Such a surprise.
Every day is like Something Day
And every day of the year seems to be [Something] Day. Today is apparently Superman Day, Red Rose Day, Call Your Doctor Day (I’ll bet that’ll make the receptionists happy!), International Falafel Day, Peanut Butter Cookie Day and Loving Day; a day that commemorates the repeal of laws that banned mixed race relationships in America. It is going to be tricky celebrating all of those things in one event, but give it a go, eh?!