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January 2017

Sterling slips as MPs debate Brexit bill

Published: Tuesday 31 January 2017

  • Sterling slips as MPs debate Brexit bill
  • Aussie Business Confidence spikes higher
  • Canadian Gross Domestic Product growth forecast
  • NZ unemployment expected to fall

British MPs get to debate the two paragraph bill, which ought to end in them voting to trigger the Start of the UK’s exit from the EU. There will be a lot of hoo-hah, obviously, and one MP has already filed 60 amendments…to a bill that contains 137 words.  Methinks he may be stalling… Sterling has slipped a little ahead of the debate and in spite of a Consumer Confidence Index that beat expectations. This morning’s UK Lending and Mortgage data may give it a bit of a fillip, though, if the positive forecasts are met.
 
It is hard to get to the US financial news through the blitzkrieg of comment on the US President’s immigration restrictions. I have no idea who voted for him, but they have all gone very quiet now. How a president can go from winning an election to the worst popularity ratings ever in 10 days is beyond me. When you do crawl through the mire, you get to today’s US data, which includes the Chicago Purchasing Managers’ Index (PMI) and the Consumer Confidence Index. Neither looks like it will set the world on fire. Perhaps we’ll leave that to the President.
 
Overnight news included the Australian Business Confidence Index which surged from +6 to +11 in December. That was double the forecast and shows the recovery of the commodity markets is having a positive effect on Aussie business leaders. That hasn’t translated into stronger hiring yet, so caution needs to be applied to one set of good data. Hence, the reaction in the value of the AUD was muted.
 
Today will bring a relentless stream of EU data, including inflation and employment figures. Key amongst these will be the core inflation for the Eurozone, which is forecast to have risen a tad, but the unemployment rate is expected to have remained at the gruesome 9.8% for yet another month. This includes the 25% level in Spain and upwards of 7% in Eire. The euro could react badly if this data is all as poor as forecast.
 
From Canada, we get the November economic growth data. We expect Gross Domestic Product (GDP) to have picked up by 0.3% on the month; and that would benefit the Canadian Dollar. If you have CAD to buy, you may wish to cover your risk before 13.30 GMT. Higher commodity prices are the likely reason for any improvement. 
 
Overnight tonight, we will see New Zealand’s unemployment data which, if the market expectations are to be believed, will strengthen the NZ Dollar. Forecasters suggest the unemployment rate will have fallen to 4.8% and hourly earnings will have risen by 0.6%. This is all good news if you plan to work in New Zealand but that data may make the NZD less affordable to buyers, so I expect the Kiwi Dollar to strengthen throughout the day.
 
I like to end with an oddity from the news, but it is hard to find news that isn’t odd these days. However, in amongst the madness (Trump is its name) there is a policy proposal that I like. Republican Senator for Mississippi, Tom Weathersby, has proposed a bill that would see anyone wearing their trousers so low as to expose their underwear being fined. I think we all need that law.
 

Quick Jokes
 

Judge: “What is the defendant charged with?”
Lawyer: “M’lud, he is charged with running up behind a youth and pulling the back of his trousers up in a manner designed to make the victim uncomfortable. He has asked for 18 other similar offences to be taken into account.”
Judge: “I see. And what is the defendant’s name?”
Lawyer: “Wedgie Kray M’lud.” 
 

Today's Major Economic Releases
 

Market
BST
Data/Event
Previous
Expected
GBP
09:30
UK: Net Lending to Individuals month-on-month
5.1b
5.3b
GBP
09:30
UK: Mortgage Approvals
68k
69k
EUR
10:00
EU: Consumer Price Index Flash Estimate 
1.1%
1.5%
EUR
10:00
EU: Core Consumer Price Index Flash Estimate
0.9%
0.9%
EUR
10:00
EU: Unemployment Rate
9.8%
9.8%
CAD
13:30
Canada: Gross Domestic Product
-0.3%
0.3%
CAD
13:30
Canada: Raw Materials Price Index
-2.0%
2.9%
USD
14:45
US: Chicago Purchasing Managers' Index
54.6
55.1
USD
15:00
US: Conference Board Consumer Confidence
113.7
112.6
NZD
21:45
New Zealand: Employment Change 
1.4%
0.8%
NZD
21:45
New Zealand: Unemployment Rate
4.9%
4.8%
 
Daily Currency Analysis by David Johnson