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Sterling levels off

Published: Monday 18 June 2018

  • Euro weakened by European Central Bank changes
  • Canadian data may be overshadowed by North American Free Trade Agreement delays
​​By David Johnson

Euro falls on quantitative easing announcement
If you step past the sport, dodge the ‘reality’ TV nonsense, negotiate your way around David Dimbleby’s announcement and duck Theresa May’s NHS promise, the interesting news of last week was the announcement by the European Central Bank (ECB) that they would stop the quantitative easing (QE) process by the end of the year.  That significantly dropped the value of the Euro and allowed the already strong US Dollar to make further gains.
The week is expected to bring slightly weaker data from the EU, so that, combined with strife within German and Italian political classes, could well see the Euro cede a little more ground to the US Dollar but maybe not against the Pound, which will also have some stress through the week.
Pound still stuck against US Dollar
We start this week with the Pound improved against many currencies and especially the Euro, but still stuck around $1.32 against the USD. And this is not a big week for data, although we do have a big day for Sterling on Thursday when the Bank of England votes on interest rates and their own QE programme. We suspect no policy changes will be made, but the voting pattern and the minutes will be essential reading for traders and analysts of all persuasions. We will also get some industrial sector data from the Confederation of British Industry (CBI) and government borrowing stats. Overall, Sterling looks likely to have a rough ride this week, based on the forecasts across the markets.
Canadian Dollar should stay strong against US counterpart
Canadian inflation will be published this week, along with retail sales data. All is forecast to be rather robust, so the Canadian Dollar is likely to maintain its stronger stance alongside the US Dollar. However, the North American Free Trade Agreement (NAFTA) talks remain deadlocked, but should resume sometime this summer. That is crucial for Canada, but the US President is being bolshie with Canada, just as he is with the EU and elsewhere.
Election Day
And huge congratulations to Bruce Lorenz, the re-elected mayor of Ruso, North Dakota, for winning the election with 100% of the votes cast on a full turnout. It nearly wasn’t a full turnout though; the new mayor, who is 86 years old, nearly forgot it was Election Day, until his daughter reminded him. That was crucial, because, in a town with just three people on the electoral register, the mayor’s own vote is worth 33% of the total votes cast.
  • My grandmother took up walking when she was 60. She would walk five miles a day. She's 97 now and we have no idea where she is.
  • The only reason I took up jogging was so I could hear heavy breathing again.
  • I have to exercise early in the morning before my brain figures out what I'm doing.
  • I like long walks, especially when they are taken by people who annoy me with their exercise stories.
  • The advantage of exercising every day is that you die healthier.
  • My suggestion is, if you are going to try cross-county skiing, start with a small country.
  • It is thought that, for every mile that you jog, you add one minute to your life. So when you are 85 years old, you’ll be able to spend an additional five months in a nursing home at a cost of £5,000 per month

Today's Major Economic Releases

Market BST Data/Event Previous Expected
USD 15:00 US: Housing Market Index 70 70
AUD 15:30 Australia: Conference Board Leading Index 0.2% 0.2%

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