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March 2016

Sterling up on thin trading

Published: Tuesday 29 March 2016

  • Sterling up on thin trading
  • US Fed Chair to speak – will she be hawkish? 
I hope you had a fab Easter and that you didn't get blown away. As Britain pays the Katie price (see what I did there), Traders across the globe get back to their desks amidst all sorts of other storms.
The Pound made some gains over the past few days despite the absence of UK traders. That probably has more to do with corrections on other currencies than it does with the strength of Sterling but it is still a welcome respite for GBP sellers. The week ahead for the Pound is not a really busy one but there are some highlights on Thursday and Friday. The final GDP growth data for Q4 should confirm the annualise 1.9% growth in 2015. That will be accompanied by credit and mortgage lending data which is likely to show a slowdown in consumer credit and perhaps a similar position on mortgage lending. That is hardly surprising with so many uncertainties hanging in the air. Brexit may be the biggie but the commodity and energy slowdowns have damaged many UK corporates; the Tata steel decision being announced today is a prime example. Slumping steel prices, the strong Pound, falling EU and global demand are all factors cited in the potential demise of the plant in Port Talbot. Let's hope it doesn't come to that but many of these factors are outside the control of Tata, the government or anyone else for that matter.
The US Dollar weakened a little over the Easter break, partly due to uncertainty over the direction of US interest rates. Federal Reserve Chair Janet Yellen will peak at the Economic Club of New York later today; a speech that will be watched for any hint that she too is becoming more hawkish on rates; something that at least 4 of her committee members have been vocal about in the past week. The US data diary is heavily weighted towards the end of the week when we are supposed to get the March employment and wages data. That doesn't usually get published on the 1st Friday of the month if that day is also the 1st day of the month. So that could be postpones but, as it will be April Fool’s Day, will anyone believe them if they do postpone?
The most important EU data of the week is probably the inflation figure which will be published on Thursday. Deflation of 0.1% is the most likely outcome and Friday's EU data is likely to show the unemployment rate remains at a painful 10.3%. Nonetheless, the Euro could end the week stronger than it started.
And we all have a new hero. His name is Matt Botten. His super-feat, according to the Metro, was to avoid extra baggage charges on an EasyJet flight by wearing all of his clothes instead of packing them. He was flying to Iceland, so he had a lot of layers with him but he still managed to get through without extra charges. It isn't to be recommended though; when Rewind band member James McElvar tried to do the same thing previously, he collapsed from heat exhaustion. You have been warned but, if you do try it, please send us a photo.

Surprise news

Hilary Clinton goes to her doctor because she is feeling nauseous and finds out she is 6 weeks pregnant. She is fuming; she's running for president, it's going pretty well and this is the last thing she needed at her time of life anyway.
Bill is away overseas on a speaking tour and she knows it will be very late in the evening there but she calls him anyway. She starts ranting as soon as she hears him say 'Hello'.
"How could you let this happen", she screams. "I've just found out I am pregnant. I can't believe this. With all that is going on in my life right now, Jeeze. It's all your damned fault. What have you got to say for yourself?"
There was a pause and then, in a whispered tone, Bill said, "Who is this?"
Market BST Data/Event Previous Expected
EUR 08:00 E19: M3, m/m (y/y) 5.0 5.0
CAD 12:30 Canada: Industrial product price, % m/m -0.5 -0.5
USD 14:00 US: Consumer confidence index 92.2 93.7
NZD 21:45 New Zealand: Building consents, % m/m -8.2 -8.2

FX Research by David Johnson

Daily Currency Analysis with Charlie Horsley

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