- US Dollar held back by fall in inflation
- China’s growth boosts currencies of suppliers
By David Johnson
The Church of England pays almost no tax, no Council Tax, no VAT and receives valuable tax breaks on donations. Their own website confirms that ‘the Church Commissioners have an investment fund of £8.3 billion’, a sizable chunk of which is invested in Amazon. So it is a bit rich for the Archbishop of Canterbury to lambast the online retailer about its ethics and tax avoidance. It also makes you wonder, when they have such massive reserves, why there are big red thermometers outside so many churches showing the steady accumulating of donations for roof repairs. Newspapers in Britain have united to disparage the Archbishop.
Carney cries crisis – keep an eye on Sterling
Hypocrisy aside, another manager of huge funds was also in the news yesterday: Mark Carney, the Governor of the Bank of England, was doing his usual doom and gloom job on the prospects of a ‘no deal’ Brexit. The headlines are plagues of locusts and house prices falling by 30%... oh and famine and pestilence, probably. But his scary vision was based on no deal, no preparation and no counter measures; the most unlikely of all unlikeliness, so a slightly pointless speech, really, but it did catch a few headlines.
The markets largely ignored the story, although Sterling did drop a quarter of a cent against the Euro and half a cent against the US Dollar. However, Governor Carney is speaking again today and there is no meaningful UK data to consider, so Sterling sellers should brace themselves. As far as Sterling is concerned, there is no surprise that Carney and carnage are next to each other in the dictionary.
US Dollar could catch up again
The Sterling – US Dollar rate would probably have fallen further if the US inflation data had not been surprisingly poor. The annual rate of US inflation dropped from 2.4% to 2.2% in August and core inflation fell as well. At a time when the US Federal Reserve is pondering further interest rate hikes, that has put a cat amongst the pigeons or a dove amongst the hawks maybe. If today’s retail sales and industrial production numbers are as forecast, the US Dollar should regain some composure.
Chinese data boosts currencies in Asia Pacific
We heard overnight that Chinese unemployment fell and industrial production picked up last month. That is a sign of global demand, because China is the world’s factory and it bodes well for the economies of China’s suppliers. Those include Australasia, Asia and other raw material producers. We have seen some strength in the currencies of those countries overnight.
Euro floating along…
The Euro is treading water at the moment. It is obviously affected by the Brexit conversation and also by the US’s aggressive protectionist stance towards anything that isn’t wrapped in the star spangled banner. There is no tier one EU data today, but we do have a couple of speeches from European Central Bank members to review and critique.
And then it is the weekend and we in the UK are looking forward to it, but spare a thought for those in the Carolinas in America, as Hurricane Florence looks set to move in and destroy things over the next few days. Good luck also to those in the Philippines in the path of Super Typhoon Mangkhut. Winds of up to 160 mph are forecast. That is truly terrifying. We wish you all a safe few days.