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November 2016

GBP has two-week winning streak

Published: Monday 14 November 2016

  • GBP has two-week winning streak
  • Eurozone industrial production awaited
  • NZ retail sales due later

We saw a bit of a slowdown in Chinese retail sales and industrial production data in the numbers released overnight. By way of contrast, Japan’s industrial production data was very positive, although their capacity utilisation data dipped. So, in broad terms, they are doing more with less effort and have further room to do more without extra hiring. That’s all positive. The Japanese Yen, which had been weakening against the resurgent Pound, regained a little strength overnight.
The Pound finished last week strongly against most currencies and Friday concluded the Pound’s best two week run in the last eight years. Measured against October’s lows the Pound is around 4% higher against the USD and 6% higher against the Euro. Sterling’s direction will be set over the next few days, with the release of UK Inflation numbers tomorrow and unemployment data on Wednesday. The Bank Of England (BoE) is watching the inflation data with interest. They have said they will look past inflation but the weakness of the Pound in October will have had an impacted on the data and moderate gains in energy prices will have had a similar effect.
Today’s data is thinly spaced, but we’ll get Eurozone Industrial Production this morning at a time when the Euro is being pressured by the US Dollar. We will also get a speech from the President of the European Central Bank (ECB) this afternoon and that will be scrutinised for hints of further rate cuts or a cessation of monetary easing. Who knows?
Late tonight (UK time) we get New Zealand retail sales data, which, if other NZ data is anything to judge by, should be positive. However, the GBP-NZD rate has been climbing as the Pound has recovered its composure after weeks of being heavily oversold. We will see if this data can reverse some of that. NZD buyers may want to protect themselves before the end of the UK trading session.
Meanwhile, the US Dollar remains firm on continued expectations of a December interest rate hike from the Federal Reserve. In the immediate aftermath of last week’s presidential election, that seemed highly unlikely but the calm has returned to USA markets and this is now back on the cards. Meanwhile, we may learn of further appointments to Donald Trump’s administration and more details of his policy agenda which could include a reduction to the United States NATO contributions.  How Putin and Assad would laugh!
Congratulations to Lewis Hamilton on a stop-start Brazilian Grand Prix win and well done to Sarah Hunter for winning Women’s Player of the Year and Maro Itoje for winning Breakthrough Player of the Year in the World Rugby Awards. Well-deserved on all counts.


Two Priests walk into a pub. Slumped in the corner is a man who is completely drunk and one of the priests asks him if he is OK.
The man is suddenly lucid and says to the priest, "Thank goodness you’re here father. The thing is that I only found out today that I am Jesus Christ". One of the Priests replies "I don't think you are son".
So the man says, “Look, I’ll prove it to you”. He walks out of the bar, bouncing off the tables and the door frame and a few seconds later comes stumbling back in.
The barman sees him, throws up his hands and shouts "Jesus Christ, what do you want now?"

Today's Major Economic Releases

Market BST Data/Event Previous Expected
EUR 10:00 EU: Industrial Production month-on-month 1.6% -0.9%
EUR 15:00 European Central Bank President Draghi speaks    
NZD 21:45 New Zealand: Retail Sales 2.3% 2.3%

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Daily Currency Analysis by David Johnson

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