- Reserve Bank of Australia cautious but next move is higher
- Chinese data mixed
- UK employment data is GBP traders’ focus.
By David Johnson
If I had taken a still photo of the pricing screens yesterday morning, I could pin it back up and still be right. Nothing has changed, really. All the hot air from all of the bankers did nothing to change the markets. Hands up anyone who is surprised……thought not.
Aussie Dollar weakens versus British Pound
The only exception is that the Australian Dollar is a half a cent weaker against the Pound after the minutes from the last Reserve Bank of Australia (RBA) meeting showed that the committee is a little more cautious than previously. They still consider the next interest rate adjustment will be an upward one, but that appears to be a long term view and no change is likely anytime soon.
That Aussie Dollar weakness would also have been fuelled by a poor set of data from China overnight. Chinese retail sales and investment data all missed forecasts, but the saving grace for last night’s Chinese data was a very strong industrial production number. The 7% rise in April was at least half a percentage point above market forecasts. This is as much a bellwether for the global economy as for China itself. And increased production means increased demand for raw materials; and that boosts the economies of the countries that supply China and which export raw materials. Money makes the world go round.
Spotlight on UK wage and employment figures for Sterling
After yesterday’s tumbleweed version of the data diary, things really rev up today. The UK employment and earnings data is the highlight of the week as far as Sterling is concerned. Forecasts were for 2.7% growth, and although real wages have gone up by 2.9%, overall wage growth is at 2.6%. However, the UK unemployment rate remains at the lowest for 42 years, at 4.2%, and this has all helped Sterling nudge back up after some pre-data jitters this morning.
Eurozone receives more disappointing data
Across the Channel, mixed data was expected and a mixed bag was released. The forecasts for Germany’s economic sentiment indices were poor; the results showed a slowdown for German economic growth, with flagging exports and imports and concerns over trade restrictions taking their toll. Being the Eurozone’s major economic contributor, this is disappointing for the overall Eurozone economy and for the Euro. Eurozone Industrial Production was expected to be positive, but came in lower than forecast, at +0.5% against the +0.7% predicted.
US Retail Sales in focus this afternoon
US Retail Sales are the highlight of the afternoon session. The forecast is for slower growth than last month and the same is true for the Empire State Manufacturing Index, also due this afternoon. The US Dollar may react to that, but is being driven more by political rhetoric than by hard data at the moment. Oil prices continue to threaten higher levels and that could weaken the USD to some degree.
As far as data goes, that’ll be about it today
A tale of two doctors…
I was amused by the news that rapper and verbal misogynist Dr Dre had tried to stop a real Doctor, Dr Drai – a gynaecologist who speaks on many women’s issues – from using his similar sounding name in the entertainment industry. Dr Drai told the court he found the lyrics written by the rapper “offensive to the women he worked with.” The court decided that Dr Drai was unlikely to be confused with Dr Dre because his books and presentations were unlikely to include the words, “B##ch ain’t Sh#t”.