- Sterling slips after last week’s rally
- US tax bill boosts the US Dollar
- Aussie data strengthens Australian Dollar ahead of Reserve Bank of Australia meeting
By David Johnson
Growth for US manufacturing sector
The Institute for Supply Management (ISM) Manufacturing Index showed solid growth in US manufacturing in November. That was one contributing factor to the gains the US Dollar has made over the last few days. The other factor is that the US Senate has approved the new tax laws, which have received mixed reactions. Sizeable tax cuts for business and high earners appear not to be matched by similar cuts for those on moderate incomes. As with all tax laws, the devil is in the detail and I am no US tax expert. What we do know is that today brings US factory and durable goods data; all of which is forecast to be lacklustre. Maybe the USD will give up some of its gains through the afternoon trading session.
Euro loses its sparkle
The Euro lost some of its lustre over the past week as well, in spite of rumours that the Brexit deal is more than 80% complete. Data from the Eurozone has been mixed, but generally positive. However, today’s producer price index is forecast to be a little weaker than the previous month, so we may see further Euro weakness on the back of that.
Sterling slips again
Sterling slipped over the latter part of last week and is weaker again this morning. There is a void in the data diary for the UK today, but the week ahead promises plenty of volatility. Purchasing Managers Indices (PMI), manufacturing, industrial and more data is set to assail us. So, too, with the National Institute of Economic and Social Research (NIESR) estimate of Gross Domestic Product (GDP) growth and that is very important. Especially since the UK Chancellor of the Exchequer downgraded his growth forecasts and the Confederation of British Industry (CBI) added its concerns.
Australian Dollar receives a boost
Overnight we heard that Australian job adverts are at a six year high and that, combined with higher iron ore prices, plus a rise in wholesale inventories, boosted the Aussie Dollar. The GBPAUD rate slipped from A$1.79 on Thursday to A$1.767 this morning. It is not going to cause an interest rate hike when the Reserve Bank of Australia (RBA) meets tonight, but it may affect the tone of their statement and that has the potential to further strengthen the AUD. We are also expecting stronger retail sales data from Australia, so beware if you are an Aussie Dollar buyer.
Grand Theft Auto Fail
And a car thief in Santa Ana in America gave the game away when he was spotted begging for petrol money in a petrol station beside the Ferrari 458 spider he had stolen. What was even more revealing was that he couldn’t work out how to refuel the car. Now come on; if you are going to play at Grand Theft Auto, at least do your homework and make an effort to look the part.