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August 2016

Sterling recovers – a little

Published: Monday 15 August 2016

  • Sterling recovers – a little
  • Kiwi slumps awaits RBNZ Governor Wheeler's speech
  • FOMC Minutes will be the focus this week 
Rio is proving to be a phenomenal Olympics for the British team. I am sure I wasn’t alone in having a double-take this morning when the table showed GB in 2nd place overall. Awesome work boys and girls and men and women and coaches and trainers and physios and families and loved ones.
There is speculation in the newspapers that Article 50 of the Lisbon treaty will not be triggered by Theresa May until 2017; leaving the exit date for the UK to leave the EU as some time in 2019. That isn’t the reason why the Pound slid through the latter half of last week but it may be significant for the next couple of years. Sterling is down ahead of hard data that covers the Brexit vote period. This week brings UK inflation, unemployment, retail sales and government borrowing data. It has to be remembered that nothing has really changed other than the shock of the exit vote but employers may well have slowed their hiring and shoppers may be nervous. Inflation will have to pick up now that the Pound has slipped to 3 year lows in most pairs and a 30-year low against the USD. Cor Blimey guv’nor, it’ll will be a volatile week for the Pound and make no mistake.
Other currencies will be volatile as well but, as Monday is practically devoid of meaningful data, that isn’t likely to start today. We do though get some Canadian housing data later in the day and that is forecast to be pretty poor. And Canada’s data ends the week as well as retail sales and inflation data due on Friday. The forecasts are for an improvement in retail activity but fairly flat inflation figures. The Canadian Dollar is being buoyed by a minor recovery in oil prices and relatively buoyant US data and that’s good news for Canada’s exporters.
And, speaking of America, the markets are on tenterhooks ahead of Wednesday’s release of the minutes from the last Federal Reserve meeting. As you know, they held their base rate but there is a growing thong of commentators urging the Fed to act pre-emptively and raise their base rate further. With so much uncertainty in the world, that is unlikely until the early part of next year but stranger things have happened.
The Eurozone has a few interesting data releases for the week including inflation, German business sentiment and the minutes from the last ECB meeting. All will be interesting but I can’t help feeling the EU data is going to start showing the impact of the Brexit decision as well and that will be really interesting. 
And this week will also bring minutes for the last Reserve Bank of Australian meeting and a smattering of Aussie and Kiwi data. We will watch it all with breath abated and a drink in hand …probably.
And the story of Ivan Rosalio Mendez Perez is an interesting one. He fell asleep in a dumpster at the side of the road in Albany, Oregon. Unfortunately, that bin was collected and emptied into the back of a bin-lorry whilst Mr Perez was still inside. And, despite trying to attract attention by throwing things out of the truck and shouting, the bin lorry compacted the rubbish a number of times before the driver got out and realised Perez was in the back. He was taken to hospital with a broken leg but is otherwise non-the-worse for his ordeal. So the moral of the story is that, if you are going to sleep in dumpsters, check that it isn’t collection day in the morning or only sleep outside bubble wrap factories.

Bradley Wiggins wins again!

An exchange on Twitter
Piers Morgan – “I was very disappointed @Bradwiggins didn’t sing the anthem. Show some respect to our Monarch please!”
Bradley Wiggins – “I was disappointed when you didn’t go to jail for insider dealing or phone hacking, but you know, each to his own.”

Today's Major Economic Releases 

Market BST Data/Event Previous Expected
CAD 13:00 Canada: Existing home sales, % m/m -0.9 -0.9
USD 13:30 US: Empire state manufacturing index 0.6 2.1
USD 15:00 US: NAHB housing market index 59 60
USD 21:00 US: TIC long-term purchases 41.1b 41.1b

FX Research by David Johnson

Daily Currency Analysis with Zeta Webber

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