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July 2017

Poor data weakens Yen

Published: Monday 14 August 2017

  • Poor data weakens Yen
  • US inflation is key for USD
By David Johnson
 
It is Bastille Day in France or ‘La Fête Nationale’ as it is known locally. So have fun celebrating the storming and the removal of the Gentry. And whilst the French markets are closed for the celebrations, the rest of the world carries on as normal. For the European markets, there isn’t a lot of data to focus on. The trade balance numbers are unlikely to move the Euro and the smattering of inflation data from a few member states is likely to be to localised to have an impact.
 
Poor industrial production data from Japan overnight has seen the Yen weaken. A drop of 3.6% on the month to May is just an acceleration of the decline that has been going on for a while.  Capacity utilisation is also down.
 
The major news for today comes from the other side of the Atlantic.  Deep Breath – Retail Sales, Consumer Inflation, Capacity Utilisation, Industrial Production, Business Inventories, the University of Michigan Consumer Sentiment and a speech by Steven Kaplan of the Federal Reserve are all due this afternoon. Of these, the inflation rate is the most significant; largely due to the Federal Reserve’s lack of clarity on interest rates and Quantitative Easing. The forecasters believe the Consumer Price Index (CPI) will drop from 1.9% to 1.7% or thereabouts and that eases some of the pressure on the Federal Reserve to make more rate hikes – but it is only a matter of timing. Nonetheless, if inflation falls below 1.7%, the Dollar will weaken and the Pound’s valiant attempts to get above $1.30 might yield a result.  Inflation above 1.9% would have the opposite effect though, so whether you are a buyer or seller of USD, you may prefer the risk averse option of covering your risk before the slew of data releases at lunchtime (UK time).
 
And a house owner near the Silverstone racing circuit has taken advantage of timing to try to sell his property. With the British Grand Prix due to take place this weekend, the home owner is banking on those arriving by helicopter taking an interest in the £1.5 million pad. He has mown the words, ‘FOR SALE’ into the lawn. I love a bit of marketing.
 

Boating humour

 
My wife went on a sailing trip to Poole
In Dorset?
Yes, she said she would highly recommend it.
 
What does Captain Jack Sparrow use to cook?
Pyrex of the Caribbean!
 
Why did the boat sink when it was moored against the pontoon?
Pier pressure!  
 
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