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December 2016

Chinese growth edges higher

Published: Tuesday 13 December 2016

  • Chinese growth edges higher
  • Higher UK inflation expected
  • Markets tense ahead of expected US rate hike

Oil prices slipped overnight as doubts grew over the widely discussed plans to cut production by The Organization of the Petroleum Exporting Countries (OPEC).That hasn’t impacted the US Dollar too much; traders are probably more obsessed with the widely expected US interest rate hike, due tomorrow.
  
We also had Chinese industrial production data overnight that showed an improvement at 6.2% annualised growth; and they also reported better retail sales at 6.2% growth. That didn’t impress the markets, but it is an encouraging sign for the global economy.
 
The Australian Dollar remains relatively weak after a drop in GDP growth and last night’s data showing a minimal increase in Business Confidence. This is in contrast to last week’s announcement of a slump in consumer confidence to the lowest ebb since May. The Australian consumers who were surveyed are far less confident about their future economic prospects and that will play into the Reserve Bank of Australia’s thinking as they ponder their stated intention to leave interest rates alone. Whether they can escape another interest rate cut is open to debate and that will keep the AUD weak for now.
 
As we switch to the UK time frame, inflation data is the key. We are all expecting commodity price rises and the weaker Pound to have pushed consumer inflation higher; and pretty well all the forecasts suggest it will reach above the Bank of England’s 2.0% Consumer Price Index (CPI) target by the middle of next year, but an annualised CPI figure of 1.1% or thereabouts is what we are expecting for November. Sterling is already up as a pre-emptor to perhaps higher levels. If the actual number is only 1.1%, Sterling will most likely slip a little.
 
There isn’t a lot of data other than this but we may need a pause for breath ahead of tomorrow’s US interest rate decision and UK unemployment data.
 
And the Post Office gets some odd requests at this time of year. They even manage to get letters to the North Pole and back, for goodness sake. But one letter really was a toughie. The address read ‘Tony and Sarah Wren, Somewhere by the sea in Suffolk. Good luck with that Postie.’ Well, the Postie came through and the letter was delivered to the right people at the right address just four days later.  Now, if the Post Office can deliver that one, where’s the card and money my mum sent me five years ago? That one had the postcode and everything.
  

Present

 
I bought my girlfriend a refrigerator for Christmas. It sounds like a rubbish present, I know, but when she opened it, her face lit up.  
 

Today's Major Economic Releases
 

Market BST Data/Event Previous Expected
GBP 09:30 UK: Consumer Price Index  0.9% 1.1%
GBP 09:30 UK: Producer Price Index Input 4.6% -0.4%
GBP 09:30 UK: Retail Price Index 2.0% 2.1%
GBP 09:30 UK: Core Consumer Price Index 1.2% 1.3%
GBP 09:30 UK: Producer Price Index Output 0.6% 0.2%
EUR 10:00 EU: Employment Change 0.4% 0.3%
USD 13:30 US: Import Prices 0.5% -0.3%

Daily Currency Analysis by David Johnson
 
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