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November 2015

Daily Currency Insight

Published: Wednesday 25 November 2015

  • Sterling lower ahead of Autumn Statement
  • USD stronger on upgraded growth data
  • AUD strengthens as rate cut forecasts are dashes
Ah, yes, autumn, when the trees blush at the thought of stripping naked in public. Those are the words of Robert Brault and that is my kind of autumn statement. Today we will get a barrage of numbers, percentages and forecasts from the Chancellor of the Exchequer and we will all spend the next few days trying to work out the winners and losers in this melee. Without a doubt, the plan is for the government to spend less and receive more in order to reduce the amount they need to borrow. How George Osborne achieves that is the subject of much debate and a lot of prejudice. Will any of affect the Pound? Probably not. Sterling has slipped over the last couple of days but that probably has a lot more to do with the downgrading of the likelihood of early interest rate hikes in the UK than anything Mr Osborne might heft at us. As there is nothing other than the Autumn Statement and some mortgage data due today, I suspect Sterling traders will sit on their hands.
 
This is the last trading day before the US Thanksgiving Day break which generally turns into a 4 day weekend. The US Dollar has been rather strong of late; probably down to the increasing likelihood that US interest rates will be the first to start rising amongst the G7 countries an significantly boosted by yesterday's news that US economic growth picked up considerably in Q3. The growth rate was upped to 2.1% from the previous estimate of 1.5%. That was largely expected but it still managed to give the USD a fillip.
 
We get US personal consumption and expenditure data from the US today along with the durable goods orders. Both sets of data are influential as far as the Fed is concerned and both are forecast to be positive. So we may well see the USD test the $1.50 against the Pound and the $1.06 level against the Euro before the end of the day.
 
We heard overnight that Governor of the Reserve Bank of Australia pulled the rug from beneath those predicting a December rate cut. Glenn Stevens said, "We've got Christmas. We should just chill out, come back and see what the data says". I guess that means nothing will happen until January; what do you reckon. The Aussie Dollar is stronger this morning as a result of his comments which go against the previously perceived wisdom ion the market. . 
 
The overnight news tonight will include New Zealand's trade balance figures. There is expected to be a slight improvement in the deficit and that would be good for the NZ Dollar if it comes true. However, NZ is coming to terms with running regular trade deficits and the NZ authorities would much prefer to return to good old fashioned surpluses but there would need to be a return to much stringer data in NZ's export markets before that can happen.
 
Please be aware that tomorrow is a US holiday. So, as the banking system uses the USD to manage all cross currency transfers, it will not be possible to book contracts for settlement tomorrow. If you need to do something urgently, it will either have to happen today or Friday.
 
That's about your lot for today. To all our American readers, have a great thanksgiving day tomorrow and take it easy on the credit cards on Friday. To everyone else, can we fight this Black Friday marketing nonsense that is being foisted upon us by the retailers? Is that possible do you think?
 
The 2nd coming
 
Two Vicars are walking along a street when a very drunk guy walks up to them and says, "Here I am guys." The Vicars laugh and ask what he means.
"Well you guys have been waiting for me to return and here I am."
Still not sure what he means they ask who he is.
"I am Jesus Christ." He says very proudly.
"No you're not," says one of the vicars.
"I really am."
"No you're not."
"Yes I am."
"No you're not."
"Yes I am", says the drunk adamantly. "Come here. I'll show you. These guys over here know I am the son of god, back to save you from your sins."
With that he heads off across the street towards a bar. The Vicars follow him at a safe distance and he pauses before going in. "Watch!" he says.
As he steps through the door and turns to smile and nod his head at the vicars as the barman shouts across the room, "Jesus Christ; He's here again."