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Sterling hanging on while awaiting more Brexit news

Published: Thursday 06 September 2018

  • Sources boost Sterling
  • US Dollar data in droves today
  • German factory data disappoints
​​By David Johnson

I love it when journalists talk about ‘unnamed sources’ or ‘sources close to…’. It means they can say pretty much anything without being questioned further. That’s what happened yesterday when ‘unnamed sources’ suggested a deal had been done between Germany and the UK on Brexit. The Pound shunted at least a cent higher against the USD and EUR and made gains elsewhere. It points to the much more substantial gains we might see if an actual deal is struck. The Pound slipped back a little later in the day when the ‘sources’ weren’t revealed or named, but Sterling did hang on to most of its gains. The distinct lack of UK data today means we will, once again, be subject to the foibles of Brexit rhetoric.
UK bucks service sector trend
Yesterday was awash with Service Sector Purchasing Managers’ Indices (PMI) from around the globe and they were mostly rather disappointing. The contrast was the UK one, which was better than forecast and better than July, so that also played into the Pound’s exciting spike. This afternoon brings the US version of the same report and it is forecast to be quite positive, so there is room for US Dollar activity around 3pm UK time.
Today started with a drop in Australia’s trade surplus, albeit less than the markets had forecast and a further contraction in Germany’s factory orders. That adds some credence to the Germans wanting to strike a deal with the UK over Brexit; who is going to buy all those cars if the UK is made less lucrative?
Plentiful US data today
The rest of the day is full of US data and there is a smorgasbord of data to choose from. We’ve got employment data, Purchasing Managers’ Indices, Durable Goods, Factory Orders; and if you eat all your greens, I’ll throw in some Crude Oil Inventories and a couple of speeches from Federal Reserve head honchos. I can’t say fairer than that, now can I? So, the US Dollar will be the main focus of the day.
Pole position
And if your children have just gone back to school, be thankful they weren’t arriving at the school in China where the Principal thought it would be appropriate to welcome them with a provocative pole dancing act in the assembly hall. I am not sure the three to six year olds knew what to make of it, but I am sure some of the parents were unimpressed.
Quick joke
A bank robber pulls out a gun, points it at the bank clerk and says, "Give me all the money or you're geography!"

The puzzled teller replies, "Did you mean to say 'or you're history?'" The robber says, "Don't change the subject!"
Oh and one more:
In an adult education English class, the teacher is trying to get a class of senior citizens to understand present and past tense, so he says, “Now Edith, if I were to say, ‘You are beautiful’ which tense am I using?”
A voice from the back says, ‘Definitely past’.

Today's Major Economic Releases

Market BST Data/Event Previous Forecast
USD 13:15 US: ADP Non-Farm Employment Change 219k 195k
CAD 13:30 Canada: Building Permits -2.3% 1.1%
USD 13:30 US: Revised Non-Farm Productivity 2.9% 2.9%
USD 13:30 US: Unemployment Claims 213k 214k
USD 14:45 US: Final Services Purchasing Managers' Index 55.2 55.2
USD 15:00 US: ISM Non-Manufacturing Purchasing Managers' Index 55.7 56.8
USD 16:00 US: Crude Oil Inventories -2.6m -2.2m

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