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December 2015

Daily Currency Insight

Published: Tuesday 08 December 2015

  • Chinese exports fall for 5th straight month
  • Oil price slump is having consequences
  • Sterling rebounds ahead of Industrial data 
Maybe Donald Trump's slogan was just slightly misspelt; maybe it should have read 'Make America Grate' because that is the affect he appears to have had on most commentators. Do you think there is an 'MUTE' button underneath his fuzzy topknot? I really hope so.
On a more serious note, there is a mixture of concern and elation over the turmoil at the heart of OPEC. Saudi Arabia and its cartel friends are maintaining the oversupply situation to damage the likes of America, Canada and the UK; countries that cannot afford to produce oil cost effectively at this sub-$40 a barrel level. The ongoing impact will be negative for any non-middle-eastern oil producers and positively for net importers of energy products.
Overnight news that China's exports fell for the 5th straight month had a negative impact on the Australian, New Zealand and Canadian Dollars as well as the South African Rand. This news plus the oil price story are all weighing on the income side of the commodity markets. Hence the GBP-ZAR exchange rate is back up at historic highs, the GBP-AUD rate is pushing towards A$2.10 again and the GBP-CAD rate is testing the C$2.0350 level which has capped this pair since September.
This upward pressure from the Pound comes in spite of overnight news which showed UK retail sales dropped against last November; a month in which we saw the full horror of Black Friday unleashed on the British Public. The phenomenon was a lot more subdued this year, so the downturn can be explained away. However we also had a Nationwide index overnight showing UK house prices actually fell last month. That's not something we have become used to. This morning's UK industrial and manufacturing data is forecast to be quite bad, so the Pound has room to decline again.
Today's big news includes Canadian housing data and we will get the Australian Consumer Confidence index overnight tonight. Last night's business confidence index was plus 5; better than last month and better than forecast but overshadowed by the Chinese data. We are expecting the consumer version to be a tad worse than last month but to be overshadowed by Chinese inflation data. I should add that China is Australia's number one export market; so the impact is understandable.
And in a scary piece of zeitgeist, we hear that a company in America is marketing bullet proof blankets that children can use in the case of a mass shooting at their school. You know that expression about treating the symptoms and not the disease...
Sunday Morning
After years of pleading with him, his wife finally persuades a wealthy businessman to come to church with her on Sunday. After the service the Elderly chap shakes the preachers hand and says, "Reverend, that was a damned good sermon. Well done."
"Well thank you for the compliment sir," said the Vicar, "But we are in the house of the Lord, so could I ask you not to use profanity whilst you are here?"
"I am sorry Reverend but I can't help myself. That was damned good."
"Sorry but I really must insist you desist with the profane language whilst we are in this place." says the Vicar.
"Fair enough; you've made your point," says the man, "but I just wanted you to know that I thought it was so damned good, I've left a £5,000 donation in the collection plate."
"Bloody decent of you", says the Vicar.