- Sterling volatile around Gross Domestic Product data
- NZ trade deficit narrows
- Federal Open Market Committee statement awaited
By David Johnson
The Confederation of British Industry (CBI) industrial trends survey printed in line with expectations with a slowdown in activity. Sterling teetered but stabilised and ended the day slightly firmer. That is ahead of today’s release of the first estimate of economic growth for the second quarter of the year. A slowdown from 2.0% annualised growth to something like 1.7% is expected. So any improvement on that will strengthen the Pound and there are those who see the number being a little more positive than that. We will find that out this morning and there are rumours that the data is being leaked ahead of the release, so Sterling’s strength in early trade could have been a portent of something…. or nothing. As it turned out, the data has just been released and it is spot on the 1.7% annualised growth rate. Whether that will be revised in subsequent calculations is a moot point at this stage, but this estimate is extrapolated from only 40% of the total data, so there is scope for that.
There was plenty of Antipodean news overnight. New Zealand’s trade deficit shrank slightly in June. However a NZD 3.66 billion gap is still not what the NZ authorities would want to see. The very strong NZ Dollar does make it easier for importers and harder for exporters, so we shouldn’t be too surprised, I guess.
We also had news that Australian inflation slipped a little in June. At 1.9%, it is almost perfectly in line with the Reserve Bank of Australia’s target rate, so there is no urgency to raise the base rate although some cooling in the housing market is needed at some stage.
US data today comes in the form of the Federal Reserve’s Open Market Committee (FOMC) announcement. No change is expected in the US base rate but Chair Janet Yellen is under pressure from all sides to start raising rates or lower them or sit on her hands, so the press conference is going to be interesting and the statement will be given the fine-toothed comb treatment. Then US traders will switch their attention to the US Gross Domestic Product (GDP) numbers due on Friday.
And that is all we have today. I hope your Wednesday is a good one. The 26th July has been a busy one in the past. In 1953 Fidel Castro started the Cuban Revolution, in 1974 a Greek government was formed after seven years of military rule, in 1973 Kate Beckinsale was born and it is Independence Day in the Maldives. I think cocktails are in order…
The other day when I was walking through the woods, I saw a rabbit standing in front of a candle making shadows of people on a tree.
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