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August 2016

Australian retail sales disappoint

Published: Thursday 04 August 2016

  • Australian retail sales disappoint
  • BOE interest rate cut is expected
  • US data expected to strengthen USD
We heard overnight that Australian Retail sales rose by a measly 0.1% in June against market expectations of 4 times that figure. This is another example of the mixed messages the Reserve Bank of Australia is having to deal with after cutting the base rate earlier in the week. The Australian Dollar was oddly stronger on the news but against the Pound, Sterling’s recovery caused a slight rise in the GBP-AUD rate.
You may already be bored of the Bank of England speculation. Most analysts believe Mark Carney and his Monetary Policy Committee will cut the UK base rate by 0.25% to the lowest level ever of just 0.25%. The Pound has though strengthened a little ahead of that decision in, what is known as short covering, i.e. traders selling out of some of the trades in which they had originally sold the Pound ahead of the news. That is just in case the BOE reverts to type and leaves the base rate on hold awaiting further economic data. They could well do just that, so we cannot be certain that the Pound will weaken today but there are other permutations as well. They may introduce further quantitative easing, may add loan support for banks lending to industry, could do a number of other things but this is just further speculation at this stage. All will be revealed at 12.00 BST.
After the excitement of the BOE, we will get US durable goods, factory orders and weekly jobless claims data this afternoon. The tone of the forecasts is generally positive, so the GBPUSD rate, which has pushed up to $1.33, could well slide in later trade. Tomorrow’s US employment report may cause traders to hold fire until they see how the US labour market fared in July.
And I had to navigate a crowd of Pokémon Go hunters on the way into the office today. What is it with this silly game! If you need your reality augmented for you to be happy, maybe you should review your lifestyle choices.


A mother is in the kitchen while her son does his maths homework on the kitchen table. She overhears him working out the sums.
He is saying quietly to himself, “Two add three….eeerm, the son of a bitch is five”.
His mum is shocked into silence as he says, “four add two…. the son of a bitch is six.”
She says, “That’s enough homework for tonight. I’ll pop in and see your teacher in the morning.”
When she confronts the teacher about what she heard, the teacher is at first shocked and then a dawning of the situation crosses her face and she starts to laugh.
“Well I don’t think this is a laughing matter, “says the angry mum. “Your teaching tactics are a disgrace.”
“I can see why you might say that, “says the teacher, “But I think the expression he was looking for was what I taught them, ‘the sum of which is six’.”

Short jokes

Standing in the park, I was wondering why a Frisbee gets larger the closer it gets. Then it hit me.
My name is Fin, which means it's very hard for me to end emails without sounding pretentious
I needed a password eight characters long so I picked Snow White and the Seven Dwarfs.
Hedgehogs – why can’t they just share the hedge?

Today's Major Economic Releases 

Market BST Data/Event Previous Expected
GBP 12:00 UK: Official bank rate 0.50% 0.25%
GBP 12:00 UK: BOE inflation report    
GBP 12:00 UK: MPC official bank rate votes 0-1-8 0-9-0
GBP 12:00 UK: Monetary policy summary    
GBP 12:00 UK: Asset purchase facility 375b 375b
GBP 12:30 UK: BOE Gov Carney speaks    
USD 13:30 US: Unemployment claims 266k 265k
USD 15:00 US: Factory orders m/m -1.0% -1.8%

FX Research by Ricky Nelson

Daily Currency Analysis with Zeta Webber

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