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April 2017

Yellen sees calm waters ahead

Published: Tuesday 11 April 2017

  • Yellen sees calm waters ahead
  • UK retail sales drop as inflation bites
By David Johnson
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Comments from Federal Reserve Chair, Janet Yellen, shortly after the US close, failed to move the USD to any great degree. Mrs Yellen sees the US economy growing at or around the Federal Reserve’s target level and wants to move slowly on rate hikes to ensure sustainable growth and stable inflation. There is a noticeable lack of US data today, so the Dollar is likely to tread water.
 
British Retail Consortium sales data overnight reflected a 1.0 percent decline in March, but Sterling was sanguine ahead of this morning’s barrage of UK data; giving the Pound scope to strengthen from its flat trading position of the last few days. UK inflation has remained at a stable figure of 2.3 percent, boosting Sterling. The Consumer Prices Index posted a 2.3% 12-month inflation rate in March 2017, showing no change from February.
 
The annual rate of producer price inflation slowed somewhat for March 2017, with output prices rising to 3.6%, from 3.7% in February 2017, the showing price growth for the ninth year in a row.
The cost of materials and fuels used by UK manufacturers went up 17.9% on the year, a slight drop from February 2017; again, this the ninth consecutive period of annual price growth.

Prices of imported materials and fuels increased 17.1%, growth in inflation for the second month in a row. However, a recent boost for export prices thanks to a weak Pound increased export turnover for motor vehicle manufacturers.
 
The Sterling–Euro rate was a tad higher overnight, ahead of the UK data. In Europe, we get the Eurozone Industrial Production today, and the German ZEW data showed continue confidence in the German economy, as the ZEW Institute’s Economic Sentiment Index posted at 19.5 in April 2017, considerably higher than 12.8 last month, and also beating the 14 that was forecast. This was the highest level for almost two years. In contrast, some of the Eurozone industrial production figures were lower than expected, dropping 0.3 percent in February 2017 – after an increase of 0.3 percent in January 2017 – and a 4.7 percent drop in energy output. A recovery in the Euro’s strength is therefore looking unlikely. 
 
It’s a short and sweet report today, with few items of real note, but the Donald & Vladimir show could create all sorts of volatility, so hold onto your hats!
 

Joke

 
A boy is asked to question a war veteran about their experiences as a project. He finds out that his uncle served in the Falklands War, so he sits down and starts asking him questions about the war, what it was about, what the result was and then he said, “Uncle Joe, did you kill anyone?”
His uncle sighed and said, ”Probably. I was a chef, you see.”
 
For more information, infographics and the latest currency insights, visit www.halofinancial.com/news
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