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March 2017

Sterling steady against improved PMI

Published: Friday 03 March 2017

  • Sterling steady against improved PMI
  • Euro strengthens as data improves
  • US Dollar is still ramping away
By David Johnson
Sterling steadied its ship yesterday when the construction sector PMI came in above expectations for February. Once again, a poor forecast is beaten by positive data for the UK economy and yet there is still the lifeless pallor of Brexit hanging over the Pound.  The UK service sector PMI is due this morning and that too could be positive. If it is and the Pound still doesn’t rally, Sterling is going to wander into the weekend wondering what it has to do to regain some popularity.
The Euro is having a better time of things after a report showed Eurozone inflation was up 2.0% in the year to February. That was at the top end of forecasts and shows that there is life in the 19 nation bloc. Other Eurozone data is less encouraging; unemployment is still dire and economic activity is still only really buoyant in Germany but Italian GDP growth is due this morning and that is expected to show a very positive result. Further Euro strength could well follow.  It doesn’t appear to have dawned on the markets that the EU losing its 2nd largest contributor is a bad thing. When they wake up to that, the Euro has some pain coming.
This afternoon brings the service sector PMI from the US under the guise of the ISM non-manufacturing index. In contrast to other indices, this is forecast to be a little lower than in January. That probably won’t unsettle the strength the US Dollar has gained in the last week as pundits compete to forecast interest rate hikes in the US. Anything between 1 and 4 rate hikes are forecast dependent on your preferred ‘expert’ and the US Dollar is stronger as a result of all this confidence.
And a South Korean app developer has come up with an app that will create a lifelike avatar of a deceased relative so that you can take a selfie with the departed. It is supposed to help people grieve for their loved ones but I can’t think of anything less likely to help you come to terms with their death than an app that brings them back to life whenever you’ve got your phone in hand. I’ve just realise it’s hard to write when you are shuddering. 


A driver reached a part of the road that had been flooded after the heavy rain from the previous night. The driver was trying to assess whether he would be safe to go through the water when he saw an old chap wearing farm workers clothing standing by the side of the road. "Excuse me sir," said the driver. "Do you know how deep the water is?"
"Oh not very deep," said the farmer. "You'll be alright to drive through it."
The driver thanked him and set off through the water but his car sank up to the windows and the engine spluttered to a halt in the middle of the flood. He scrambled out and waded in the chest high water back to dry land. He turned to the old chap still sitting on the gate nearby. "You idiot! I thought you said that water wasn't deep."
"You’m right there. I did say that. It proper fooled me," said the countryman, "but that water only reaches halfway up them ducks over there!"     

Today's Major Economic Releases

EUR 09:00 EU:  Final Services Purchasing Managers' Index 55.6 55.6
GBP 09:30 UK: Services Purchasing Managers' Index 54.5 54.2
EUR 10:00 EU: Retail Sales -0.3% 0.3%
USD 14:45 US: Final Services Purchasing Managers' Index 53.9 53.9
USD 15:00 US: ISM Non-Manufacturing Purchasing Managers' Index 56.5 56.5
USD 18:00 Federal Reserve Chair Yellen Speaks    

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