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April 2016

China's exports recover

Published: Wednesday 13 April 2016

  • China's exports recover
  • Bank of Canada likely unchanged
  • IMF warning goes unheeded
The International Monetary Fund made a big show of warning just how awful it would be if the UK were to leave the EU. However, it appears their caution of global economic damage fell on relatively deaf ears because the Pound only weakened a little. To be fair, the IMF doesn't have a great track record of forecasting things, so pinches of salt were taken all around.
Elsewhere, there appears to be an agreement between Russia and Saudi Arabia to limit oil supplies to try to restore some strength to energy markets and, it would appear their plans will progress even if Iran doesn't join forces with them. That has pushed oil prices to the highest this year and benefited the Aussie, Kiwi & Canadian Dollars as well as the South African Rand.
Those currencies also benefit from improved commodity market prices after Chinese trade data showed growth in export for the first time in 9 months. That's also the largest jump in exports since February 2015. The gains in the commodity related currencies were matched by the weakening of the US Dollar. This generally happens when commodities gain because those base products are traded in USD.
Today brings a whole plethora of reasons for traders to be in and out of the market like a ferret on Red Bull and blue Smarties. French and Italian inflation data is likely to be lacklustre and Eurozone industrial production likewise. So some weakness in the Euro is highly likely.
We will also get the Bank of Canada's interest rate decision, although no change is expected there. The highlight is probably the US retail sales data. If the Federal Reserve really does want to move ahead with interest rate hikes as soon as is manageable, then they need shopping malls to be busier. However, this data is likely to show little or no growth in that area. We will also get the US producer prices indices but there is little or no inflation in this data anywhere in the world.
So, whilst there will be plenty of data dashing around the markets, unless any of it is at significant variance to the forecasts, the volatility will be evident but perhaps muted.
And many news wires are covering the news that actor Gwyneth Paltrow is using apitherapy for beauty reasons.  It involves getting bees angry and then letting them sting you in strategic places. It is supposed to help with arthritis. But I wonder if I am the only one wondering what the poor bees do to deserve this. Bees die when they sting you, so an undisclosed number of bees were harmed in the Gwinnie treatment. What the heck did they do to deserve that and how is that different to killing a tiger for its skin? I've suddenly gone right off Pepper Potts.

My Wife

A very drunk guy staggers into a bar. He stands at the bar doing nothing but staring at a woman seated on a bar stool. After staring for some time, he saunters over to the woman and kissed her full on the lips. She jumps up and slaps him several times.
He immediately apologises and explains, "I'm sorry. I thought you were my wife. You look just like her."
"Why you worthless, foul smelling, drunken scumbag. Don't you dare touch me!" she screams at him.
"Wow," he says in amazement, "you sound just like her too."

Today's Major Economic Releases

Market BST Data/Event Previous Expected
EUR 09:00 E19: Industrial production 2.1 -0.8
USD 12:30 US: Retail sales, % m/m -0.1 -0.8
USD 12:30 US: Core retail, % m/m 0.0 0.3
USD 12:30 US: PPI, % m/m (y/y) -0.2 0.1
CAD 15:00 Canada: Interest rate announcement, %  0.50 0.50
CAD 15:00 Canada: BoC monetary policy report    

Daily Currency Insight by David Johnson

Daily Currency Analysis with Alastair Sweetman

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