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May

Sterling recovers but US Dollar is stronger

Published: Wednesday 09 May 2018

  • Euro slips on mixed news
  • New man at Reserve Bank of New Zealand to deliver monetary policy statement
​​By David Johnson

Tuesday wasn’t a big day for data, but there were some high points. The UK Halifax housing market data showed slower annualised growth in prices, but growth nonetheless. That hardly moved the Pound, but Sterling did edge higher during the day. Tomorrow’s Bank of England shenanigans are the big news of the week and no change is expected there, but the Pound continues to improve a little.
 
Euro weakness helps boost Pound

That is particularly true against the Euro. The Euro – US Dollar rate has fallen over the past few days and that weakness in the Euro against the emboldened USD has allowed the Pound room to improve. The GBPEUR rate is above 1.14 again and may well edge higher still as the day progresses.

Not much news expected from US today

I doubt Trump’s decision to ignore the pleading of French President Macron to stick with the Iran deal had much to do with things, but the US Dollar did react positively to the announcement. US markets seem to like a bit of gung-ho. Today’s US Producer Prices will be largely overshadowed by that story and, other than a speech from a Federal Reserve member, there isn’t a lot to focus on in the US of A today.

Patchy European economic improvement

European data is improving, of that there is little doubt, but it remains rather disparate. German Industrial Production bounced back a little last month, but French Industrial Production data (due this morning) is forecast to have gone the other way and we are expecting a slowdown in Italian Retail Sales data, also due this morning.  The coalition talks in Italy appear to be failing, so yet another election seems imminent. All is not certain in the currency sharing bloc and it also appears to be dawning on the markets that the EU’s second largest contributor is actually leaving. Further weakness in the Euro is a real possibility.
 
New Zealand interest rate decision from new central bank chief anticipated eagerly

After the UK and US have shut down for the day, we will get an interest rate decision from the Reserve Bank of New Zealand. No change is expected but the Reserve Bank of New Zealand (RBNZ) has a few dilemmas on its hands and a new man at the helm. Governor Adrian Orr will deliver his first monetary policy statement tonight and the markets are keen to evaluate the new man’s mind-set. The RBNZ is tasked with managing inflation and maximising employment these days. However, it is likely Mr Orr will say no change now and perhaps none for a year when he speaks. The New Zealand Dollar will only react if he changes that script.

 Slogan, schmogan…

And FIFA is trying to choose a slogan for England’s team bus for the 2018 World Cup. “Send us victorious”; “Drive forward as one”; and “Pride. Passion. Together” are three suggested options, but fans and non-fans have their own ideas. ‘Keep the engine running’, is one suggestion and ‘Bussed in – bust out’, is another. What are your suggestions? I quite like ‘Overpaid, underwhelming and over here,’ or the grammatically dire lie of, “We was robbed.”
Oh Deer

A guy goes hunting for the first time and shoots a deer. He brings it home and decides to clean and prepare it in his shed and surprise the family with roast venison for dinner. He tells the kids not to come in while he does it because "It’s a surprise”. Of course, that piques their interest and they keep coming to the door shouting questions about what they are going to have. They don’t get a straight answer and the guy tells them to wait for the surprise. He sneaks a joint of venison into the oven and prepares the veggies and gravy etc. 

Before he brings the food to the table, the kids ask yet again what they are going to eat. 
“Well”, he says, “I’ll give you a clue. Think of a word that your mum uses to describe me. That’s what we are eating.” 
With that, his daughter screams and leaps out of her chair. She runs for the door as she shouts back over her shoulder, “Don’t eat it Jimmy, he’s cooked a lazy good for nothing scumbag."

Today's Major Economic Releases

Market BST Data/Event Previous Expected
CAD 13:30 Canada: Building Permits -2.6% 2.0%
USD 13:30 US: Producer Price Index 0.3% 0.2%
USD 13:30 US: Core Producer Price Index 0.3% 0.2%
USD 15:00 US: Final Wholesales Inventories 0.5% 0.6%
USD 15:30 US: Crude Oil Inventories 6.2m -0.2m
NZD 22:00 Reserve Bank of New Zealand Official Cash Rate 1.75% 1.75%
NZD 22:00 Reserve Bank of New Zealand Monetary Policy Statement    
NZD 22:00 Reserve Bank of New Zealand Rate Statement    
NZD 22:00 Reserve Bank of New Zealand Press Conference    

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