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November 2016

Sterling slips back ahead of inflation data

Published: Tuesday 15 November 2016

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  • Sterling slips back ahead of inflation data
  • Reserve Bank of Australia minutes are very upbeat
  • NZ service sector boosts NZD

Monday lacked market moving news, so exchange rates meandered in recent ranges.  Sterling pushed higher and then fell back driven largely by intraday speculation as far as I can tell. The US Dollar slipped a little on profit taking and the markets spent their time speculating on whether the Euro-USD rate will reach a 1:1 parity level.
 
We did get some movement overnight however after the Reserve Bank of Australia (RBA) published its meeting minutes and they were decidedly upbeat. Rate cuts are not on the agenda at the moment and, in spite of slowing Chinese growth, the RBA is confident about the Australian economy. They did voice some concerns over the disparity between the housing markets in different areas. The AUD strengthened on this news.
 
New Zealand’s Dollar also strengthened after figures showed growth in the New Zealand service sector in October. The index rose from 54.2 in September to 56.3 in October and that is a significant improvement.
 
We will get a slew of inflation data this morning from across the Eurozone and the final Gross Domestic Product (GDP) growth figure for Quarter Three. That is unlikely to change from the previous estimate of 0.3% growth. The Euro is unlikely to be moved by the news.
 
From the UK, we will get inflation data for October. As you know, the Bank of England (BoE) has said it isn’t too bothered about higher inflation at this point, so anything around 1.3 to 1.5% will be considered par for the course and Sterling will tread water. However, there is a feeling that tomorrow’s unemployment and wages data will be quite upbeat, so Sterling is unlikely to decline today.
 
And if you think your email inbox is a problem, spare a thought for the NHS staff. Every one of them was added to a distribution list (all 1.2 million of them) and they were all emailed at the same time yesterday. What made matters worse is that a number of the recipients then asked to be removed from the list by replying to all. Gazillions of emails flooded the NHS system which slowed to a snail’s pace. Ooops.
  

New World

 
A woman has just given birth to a beautiful girl. The hospital registrar comes along to the ward and after cooing over the baby, asks the woman if she has chosen a name for her new daughter.
 
“Yes,” she says, “I’m going to call her Sarah.”
 
The registrar looks at her clip board and shakes her head. “Sorry, “she says, “That’s already taken but you can have Sarah_123Kfd or S4rah88.” 
 


Today's Major Economic Releases
 

 
Market BST Data/Event Previous Expected
GBP 09:30 UK: Consumer Price Index year-on-year 1.0% 1.1%
GBP 09:30 UK: Producer Input month-on-month 0.0% 1.6%
GBP 09:30 UK: Retail Price Index year-on-year 2.0% 2.3%
EUR 10:00 EU: Flash Gross Domestic Product (GDP) 0.3% 0.3%
GBP 10:00 UK: Inflation Report Hearings    
USD 13:30 US: Core Retail Sales month-on-month 0.5% 0.5%
USD 13:30 US: Retail Sales month-on-month 0.6% 0.6%
USD 13:30 US: Empire State Manufacturing Index -6.8 -1.5
USD 13:30 US: Import Prices month-on-month 0.1% 0.4%

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Daily Currency Analysis by David Johnson

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