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February 2017

Sterling steady as retail data offers mixed messages

Published: Friday 24 February 2017

  • ‚ÄčSterling steady as retail data offers mixed messages
  • US oil exports threatening the dominance of the Organization of the Petroleum Exporting Countries (OPEC)
  • Canadian inflation should show growth
By David Johnson
The Confederation of British Industry (CBI) Distributive Trades survey was a mixed bag. Retailers are expecting poorer conditions in the coming three months, but current activity bounced back from last month. Sales levels were up. So, whilst negativity pervades forecasts and expectations, the actual activity is in positive territory.  That seems to be the way of things for the UK right now. All the forecasts are dire, but the activity is quite the opposite. However, uncertainty over business rates will be having an impact on business confidence. Some big rises are mooted. Sterling was on a ‘steady as she goes’ path through the day, with minimal volatility as we head towards today’s mortgage data from the British Bankers’ Association (BBA).  
Oddly, the US Dollar has not strengthened, in spite of news that many Federal Reserve members are seeing an interest rate hike pretty soon. It must be said that this level of hawkishness was not borne out within the minutes of their last meeting, which were published this week. In unrelated news, it is becoming clear that America is becoming less reliant on imports for oil and energy products. The US exported more than a million barrels of crude per day for the last two weeks, as shale production boosts output; making the US a real challenge for OPEC.
We are seeing reports that a Greek debt deal is nearly in place. The three parties, Greece, Germany and the International Monetary Fund (IMF) appear to be on the brink of a deal. I wonder if the IMF still feels that Greece will need to leave the Eurozone at some stage. The euro is largely unmoved by the news.
Reserve Bank of Australia Governor, Philip Lowe, scotched any idea of further interest rate cuts overnight, as he said that he sees little chance of further falls in inflation. He went on to pour scorn on the global race to cut corporate taxes. I suspect Australia will be the last in the queue to do so, then. The Aussie Dollar remains rather overvalued in the wake of his comments.
Today’s only meaningful data comes from Canada. We are expecting a pickup in the rate of inflation, as higher energy costs and rising commodity prices lift prices. The headline rate ought to be in the 1.5 to 1.7% area and that is well within the Bank of Canada’s comfort zone. So, the Canadian Dollar may strengthen a little if the number is at the upper end of that spectrum.
And Waitrose is in the news (well on Twitter, which is nearly news…) for the wrong reasons. They have launched the £15 LED illuminated Easter Tree as a… thing. Oddly, rather than just ignoring it as yet another useless bit of marketing nonsense, some people have become apoplectic with rage that such a thing even exists. What are your thoughts?


A Farmer is out in the fields of the farm he’s just taken over. The farm has been unoccupied for several years. The barn doors are hanging off, there isn’t a pane of glass left in the farmhouse and the fields are totally overgrown. As he works, the local vicar walks up the lane to introduce himself. “Well, you have a lot of work on your hands,” says the vicar. “It is good to see Oak Farm being worked again.”
The farmer stops what he is doing to greet the vicar. “I am not sure I realised how bad it was until I started work on it,” he says.
“Never mind, my son,” says the vicar. “With you and the Lord working together, this will become the farm of your dreams. Of that I have no doubt.”
Four months later, the vicar takes another walk out to Oak Farm. He is astonished. The fields are all ploughed or sown, the hedges are cut and laid, the barn has a new door and the farmhouse is much improved. When he sees the farmer, he hurries across the yard. “This is astonishing,” he says. “Look at what you and the Lord have achieved.”
“About that,” says the farmer. “Do you remember what a mess this place was when you were here four months ago; all overgrown and smashed up?”
“Indeed I do”, says the Vicar.
“Well, it strikes me,” says the farmer, “that was when God was working the farm on his own.”

Today's Major Economic Releases

CAD 13:30 Canada: Consumer Price Index -0.2% 0.3%
CAD 13:30 Canada: Common Consumer Price Index 1.4% 1.4%
CAD 13:30 Canada: Median Consumer Price Index 2.0% 2.0%
CAD 13:30 Canada: Trimmed Consumer Price Index 1.6% 1.6%
CAD 13:30 Canada: Core Consumer Price Index -0.3% -0.1%
USD 15:00 US: New Home Sales 536k 575k

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