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May 2017

Sterling steady as election gets underway

Published: Wednesday 03 May 2017

  • Sterling steady as election gets underway
  • NZD strengthens as unemployment drops below 5%
By David Johnson
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As from today, we have no MPs in the UK, just candidates. Oddly, you will probably hear more from your local MP over the next 5 weeks than you will for the following 5 years but that’s politics.
 
Sterling seems to be taking all this electioneering in its stride and is trading in narrow ranges at the top end of its recent ranges. The lack of UK data today will probably leave Sterling in that cryogenic state for now. However, a statement from the EU’s chief Brexit negotiator has definite ‘cat amongst the pigeons’ potential.
 
As the UK election campaign starts to gather momentum, the French presidential elections draw nearer to a conclusion and it looks like Monsieur Macron is likely to take the win. That likelihood has calmed the nerves of Euro traders and the Euro has settled down a little. We get the preliminary calculation of Eurozone economic growth for the first three months of the year today. Quarterly growth is expected to match the previous 0.4% growth but some are forecasting a small uptick in that number. That would boost the Euro; especially if the Producer Price data; also due this morning, is above 4.4% for March.
 
US data today is slim but the service sector Institute for Supply Management (ISM) report is very influential on sentiment in the Federal Reserve and that is expected to be rather upbeat. If that proves to be the case, then the USD may recover some of its lost ground.
 
The New Zealand Dollar has gained some ground overnight after positive unemployment data. The rate of unemployment dropped to 4.9% in the 3 months to March and the labour market participation rate hit an all-time high. The only downer on the data was the fact that hourly earnings increased only marginally and missed the forecasts.
 
And I know it is puerile and childish to mock Diane Abbott after her scattergorical interview yesterday, but it does highlight the way that some politicians are either uninformed or ill-informed. If that had been a performance in front of the Dragon’s Den, they would all be out.
 

Quote

 
“Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.”
Groucho Marx
 
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