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July 2016

Canadian retail sales give healthy rise

Published: Monday 25 July 2016

  • Canadian retail sales give healthy rise
  • Canadian inflation steady
  • Sterling drops on poor PMI indices

It was all about bottles at the weekend. Champers for the amazing Chris Froom in his 3rd Tour de France win, champers for Lewis Hamilton who now leads the F1 drivers' championship after his 5th win in Hungary, I hope Joe Root opened a bottle of something fizzy after a batting masterclass at Old Trafford and as for the International Olympic Committee; well they just plain bottled it.

Last week was more commiseration for the Pound than celebration. Sterling dropped on a poor set of purchasing managers indices. Surely no one was surprised that orders were tougher to come by in the wake of the Brexit vote and all the uncertainty that brought. However, the fall in the value of the Pound may be the trigger that redresses that balance. It makes UK exports more attractive after all. Any news that suggests the UK is getting its trade negotiations with the rest of the world in place will help Sterling but we can't rule out further dips either.
This week brings more forward looking data from the UK. It starts with today's CBI industrial trends survey and, as that is also based on orders, it should be down a little. Sterling is likely to weaken on that news. The rest of the week brings lending data for credit cards loans and mortgages (likely weaker) and the first estimate of Q2 economic growth but the forecasts on this are very mixed. Anything between an annualised 1.4% and 2.1% are being touted as the likely outcome, so there is plenty of scope for volatility around that data's release on Wednesday. 
We will see GDP growth data from the EU, US and Canada this week. The EU one is expected to be poor, the US one positive and the Canadian one is forecast to be very poor. As you might expect, the currencies of these countries will track the data, so be prepared.
This week is also awash with consumer and business sentiment indices. This will be some of the first post-Brexit data that reflects sentiment after the vote, so there is room for surprises and we should expect the unexpected.
Wednesday brings Australian inflation data and that is expected to be rather upbeat, maybe delaying RBA interest rate cuts and strengthening the Australian Dollar.
Overnight tonight will bring the release of New Zealand's trade balance data. Most analysts expect a minimal trade surplus but, such is the volatility in internationals trade right now that they could be wildly wrong. This is a good day to have automated orders in the market overnight if you have NZD requirements.
Throw into this melee that this is the last week of the month and therefore traders will be settling some of their speculative trades and the scene is set for a bumpy old ride. Hang on tight.


Definitive proof that English is a tough language to master. Take the GH from Enough, the O from Women and the TI from Nation and you have the letters GHOTI. However, if you pronounce them as they were in the words you extracted them from, you have the word 'FISH'.

Today's Major Economic Releases 

Market BST Data/Event Previous Expected
EUR 09:00 German IFO business climate 108.7 108.3
GBP 11:00 UK: CBI industrial order expectations -2 -6
NZD 23:45 New Zealand: Trade balance  385M 128M

FX Research by David Johnson

Daily Currency Analysis with Richard Smith

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