Sterling’s slide seems to have come to an end for now. The Pound has bottomed out around the EUR1.10 level and around USD1.30 against the US Dollar. It is similarly flat against other currencies and that may remain the situation for the first couple of days of this week. Things heat up for the Pound from Wednesday, when the Royal Institution of Chartered Surveyors (RICS) publishes house price data and Thursday brings industrial and manufacturing data, along with the National Institute for Economic and Social Research (NIESR) estimate of Q2 economic growth. After the Bank of England (BoE) dropped its growth forecast for the year, it will be interesting to see if the NIESR has similar sentiment towards Britain’s growth prospects. This morning’s Halifax House Price Index was better than forecast, so that helped the Pound somewhat.
The US Dollar starts the week a little stronger, after better than expected US employment data. The markets had expected the US to have created 180,000 new jobs or thereabouts in July. The actual number was 209,000 and the unemployment rate dropped to 4.3%. As mentioned last week, that is about as near to full employment as any economy can get and it brings pressures on wages. Wage growth tends to lead to inflation and that is a siren call for the US Federal Reserve to start unwinding its $4.35 trillion Quantitative Easing (QE) budget and/or start raising interest rates to balance the economy. USD strength would then be highly likely, but, with tougher sanctions against North Korea having been approved by the United Nations (UN), tensions are racking up; and that also tends to strengthen the USD. Data-wise, the US Non-Farm productivity figures on Wednesday are expected to be a tad weaker than previously and that may ease the pressure, allowing the USD to weaken a tad. Friday’s US Consumer Inflation data is likely to add to the USD’s woes.
There is a fair amount of Eurozone data due to be released this week. It started with this morning’s release of German Industrial Production data; that was well below the previous month and below market expectations. In fact, the seasonally adjusted figure showed a contraction in activity. With slow growth overseas and a resurgent Euro, German exporters are clearly finding it tough. And if Germany is struggling, it is highly likely that the rest of Europe will be too. The rest of the week holds a lot of data from individual Eurozone member states, but there is little in the way of Eurozone-wide data.
Elsewhere, there is a host of data from China this week – and that always affects the countries that trade in commodities or supply China. Australia, New Zealand, South Africa and Canada are among these. China’s trade balance data, due early tomorrow (UK time), looks set to deliver upbeat numbers on all fronts and, if that proves to be accurate, it will strengthen the currencies of the aforementioned countries.
And you can get pretty well anything from vending machines these days; tooth brushes in hotels, breath fresheners, food and drink of all sorts, but on the lle De Re off the West Coast of France, Tony Berthelot, an oyster farmer, has gone a step further in offering fresh oysters from his machine. Personally, I worry about the sell-by dates on chocolate bought from vending machines.
A photographer working on an assignment for National Geographic was in one of the most remote parts of the African continent. He came across a primitive village where the residents were living in thatched huts and wearing colourful primitive garments. He approached a man who appeared to be the chief who was wearing a large headdress made of woven hemp and bright feathers. He wore a lion skin around him tied with a snake skin belt.
The photographer, not knowing how to speak to him, tried Swahili, Gbaya, Banda, Baka and the few words he knew of Lingala, but the chief didn’t understand. So he pointed to his camera, then to the chief, and made the shape of a picture. The chief nodded. Relieved, the photographer started taking a meter reading, but was interrupted by the chief, who said, "It is a bit overcast, so I would use f/5.6 at 1/200th and set the ISO to 400 if I were you."
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