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February

Sterling set for more rough and tumble

Published: Monday 11 February 2019

  • USD traders confused ahead of data barrage
  • Eurogroup meets to discuss outlook
​​​​​​By David Johnson

The England’s rugby union teams are in rude health aren’t they. The men’s, women’s and under 20's teams all scored very healthy wins over their French counterparts. I am still wiping the tears of joy away and really looking forward to the Wales games.
 
Further concerns about China’s slowing economy are keeping currency traders on the back foot. In these scenarios traders tend to head for the US Dollar but the US economy is likely to be affected by any Chinese slowdown, so uncertainty is the overriding mood. We will get trade data from China this week, so tongues will be wagging ahead of Thursday…and beyond, depending on the results.
 
The week ahead will throw a lot of news at USD traders. Retail sales, inflation data and a raft of sentiment indices will assault the senses. Traders and investors will deal with those whilst watching the ‘Wall’ issues and the impact on the US politics. Another government shutdown is still possible and that has an impact.
 
Sterling had a bucking bronco ride last week but ended Friday’s trading session with little loss on the week overall. Today looks set to be another bumpy one. Quite apart from the ongoing scrabble by the UK Prime Minister to get some kind of deal done before the Brexit clock stops ticking, we have economic growth, business investment, manufacturing production and balance of payments data today. As you might expect, the forecasts are slightly negative but not dire. Hence, anything to the upside of these forecasts will boost the Pound. Beware if you are a GBP buyer.
 
In fact, the UK data dominates the data diary today. Swiss inflation fell below expectations this morning; at minus 0.3% it the January number was on par with December’s. That weakened the Swiss Franc a little.
 
Other than a Eurogroup meeting, (a meeting of the 19 Eurozone finance ministers) there is little to report from the EU. Mind you, the Eurogroup has a lot to talk about. They not only face the Brexit question but also the anger of Italy over the European Central Bank’s reaction to their budget plans, the ire of Greece over how badly they feel they have been treated and a marked slowdown in the powerhouse of the Eurozone, Germany. However, the forecast for German Gross Domestic Product (GDP) growth, due for release on Thursday, is quite positive. Whether that forecast is a good one is open to debate right now.
 
And today is a birthday for a lot of women I really like, Kelly Rowland, Sheryl Crow, Jennifer Aniston and Mary Quant. It is also Sarah Palin’s birthday though, so there’s a bit of balance for you. Have a good one.
One liners
 

When I was little, I had a problem that meant I had to eat worms every day. I survived though. It was a good thing my older brother told me all about the condition… and the cure.
 
Behind every angry woman there’s a man who had no idea what he did wrong.
 
Behind every successful man is a woman rolling her eyes.
 
I think my neighbour is stalking me. She's been googling my name on her computer. I saw it through my telescope last night.
 
I decided to replace our bed with a trampoline. My wife hit the roof.
 
My girlfriend is always stealing my shirts and sweaters but I took just one of her dresses and now ‘we need to talk’.
 
My wife complained last night that I never listen to her… well she said something like that.
 
A clean house is the sign of someone ‘working from home’.

Today's Major Economic Releases

Market BST Data/Event Previous Expected
EUR All Day Eurogroup Meetings    
GBP 09:30 UK: Gross Domestic Product 0.2% 0.0%
GBP 09:30 UK: Manufacturing Production -0.3% 0.2%
GBP 09:30 UK: Preliminary Gross Domestic Product 0.6% 0.3%
GBP 09:30 UK: Preliminary Business Investment -1.1% -1.3%

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