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June 2016

OOoer the EU referendum is tomorrow

Published: Wednesday 22 June 2016

  • OOoer the EU referendum is tomorrow
  • US Dollar pauses on Yellen's cautious comments

So last night brought a stream of spontaneous passion from both sides in the 'Great Debate' about the EU referendum. It was all very well-rehearsed, minutely calculated spontaneous passion but we weren't supposed to notice that. Did we learn anything? Not really. Did it change the minds of any of the audience? Probably not. Will it affect the outcome when the votes are counted on Friday? I doubt it. Did it affect the financial markets? Nope.
Probably more influential were the comments from the Chair of the Federal Reserve, Janet Yellen, who urged a cautious approach at a time when there was "considerable uncertainty".  She cited slow investment and near full employment as possible impacts but sees a reduced risk of recession. Nonetheless, it means no rate hikes for now and the US Dollar, which seems set to strengthen, paused for thought.
Sterling paused a little yesterday when UK government borrowing was shown to be higher than forecast. However, it was largely ignored as the clichés were out in full compliment. The vote is going down to the wire. Voters must step up to the plate. This is a once in a lifetime opportunity. Every vote counts. We can stay in Europe for one affordable monthly payment of just £700 million. (That last one was mine though).
With the EU referendum just one day away, whatever data was published today would be kind of unimportant so it is a result that there is little to offer. We will get South African inflation numbers and that is likely to rise to 6.4%, prompting further calls for interest rate hikes. The Rand may well strengthen if this is the case.
We will also get Canadian retail sales data which is likely to be a tad down on the previous month. The Canadian Dollar is already weaker on the week and may weaken further.
And a primary school in Australia, faced with the son of a farmer who came into school with his toy guns, has addressed their nervousness over kids playing with pretend firearms by creating gun licences for the children. They have to get a licence to bring their toy guns in. The guns are locked in a cabinet during the day but they can use them at play time as long as they adhere to rules whereby they can't shoot at people, only targets and they have to keep the guns pointed at the ground when not aiming. I can see the point and I admire them for not getting all officious about the kid's toys but isn't it sad that this has to be such a big deal. A lot has changed since I was a kid playing cowboys and Indians shouting 'bang bang' and 'peeeeoooow' for the ricochets. I didn't have a cabinet for the stick I used as a gun or bow dependent on which side I was on.

At the wedding

The bride and her father walked down the aisle of the church followed by three bridesmaids and a small boy. They all walked in slow march but the little boy would take two steps and then put his hands up in the air in the shape of claws and give a little roar. He did this several times before the got to the steps at the front of the altar. The congregation were all laughing by this point and the vicar couldn't continue until he had asked the boy why he was doing that Step Step Roar thing. "Well Susan said I could be in the wedding but I couldn't be a bridesmaid because they are all girls. So I agreed to be the Ring Bear."

Today's Major Economic Releases 

Market BST Data/Event Previous Expected
CAD 13:30 Canada: Core retail sales m/m -0.3% 0.7%
CAD 13:30 Canada: Retail sales m/m -1.0% 0.8%
EUR 15:00 EU: Consumer confidence -7 -7
USD 15:00 FED Chair Yellen testifies    
USD 15:00 US: Existing home sales -0.9M -1.3M

FX Research by David Johnson
Daily Currency Analysis with Zeta Webber

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