- Chinese holiday leaves markets quiet
- Sterling holding its own but a bumpy week awaits
By David Johnson
The US trade agreement with Mexico and Canada has long been known as NAFTA. That stood for the North American Free Trade Agreement – and therefore a free trade area. It now has the nature of Not A Free Trade Area after the latest eleventh hour announcement of an agreement of sorts, which is labyrinthine in its complexity and certainly much more favourable to the US than the previous agreement. The Sterling – USD rate shows the Dollar’s gain on the news whilst the Pound has held above the €1.1225 level.
Chinese holidays may have boosted US Dollar
The public holidays in China and Hong Kong overnight left the markets fairly light and that perhaps amplified the USD’s gains. The Tankan manufacturing and CAPEX indices, released overnight, both fell short of market expectations. That may too be US related, as America and China continue to shuffle around the ring in their trade battle.
Sterling’s challenges this week will emanate from the Conservative party conference and all things Brexit. However, we start the day with the UK Manufacturing Purchasing Managers’ Index (PMI)
, which showed growth compared to last month’s disappointment; and that is a good thing, especially when all we seem to hear is about how our manufacturers are suffering. I think the manufacturers of the UK are proving far more resilient than politicians give them credit for. In contrast, the equivalent European index was released this morning; and showed a small dip.
Italy and Brexit taking up agenda for Eurogroup?
As well as the Tory party meeting, there is a Eurogroup meeting today. No doubt Italy’s budget problems and Brexit will be high on the agenda; if not in the main meeting, then certainly in the side rooms, away from the cameras. The impact on the Euro is minimal, unless something significant changes; and that appears unlikely.
What to watch…
This afternoon brings more manufacturing PMIs from the US, in the guise of the official one and the ISM version, and we’ll also have a smattering of central bankers’ comments through the afternoon session.
And I am not a big golf fan, but I did find myself watching the end of the Ryder Cup and enjoying the emotion of it all. I still can’t get my head around the excitement of hitting a little ball around a park, but I can’t help enjoying people who are good at doing something they love. Well done the European Team.