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November 2016

Sterling strong after retail data but awaits Autumn statement

Published: Friday 18 November 2016

  • Sterling strong after retail data but awaits Autumn statement
  • CAD may benefit from Canadian inflation uptick
  • US rate hike looms larger on strong labour market

Federal Reserve Chairwoman, Janet Yellen, voiced her concerns about the strength of the US employment market and warned that rising wages could force the Federal Reserve to start raising the US base interest rates very soon. The US Dollar, which is already strong in the post-election glow, is strengthening across the board.
 
The Euro remains weak this morning after the President of the European Central Bank warned that loose monetary policy is set to remain for an extended period. The Sterling – Euro rate is teasing €1.17 and the Euro-US Dollar rate has slipped to $1.06.
 
After yesterday’s report of UK retail sales growing at the fastest pace in 14 years, Sterling has no data to drive its value today, so traders will sit tight ahead of next week’s Autumn Statement from the Chancellor of the Exchequer. Speculation is rife about what Phillip Hammond will do in his first Statement as Chancellor, but fear of further slowdown in the UK economy will most likely leave him little room for manoeuvre. A bit of tinkering is likely, although, as the new man in the job, he may want to make some more interesting announcements just to mark his territory. 
 
This afternoon brings Canadian inflation data and it is likely we will see some sort of rise in the figure from September’s 1.3% annualised growth.  The Sterling-Canadian Dollar rate has been trapped below C$1.70 and it is likely to drop from there is the forecasters have got their sums right.
 
And here’s an interesting thought. Dietmar Exler, chief executive of Mercedes-Benz USA, believes that human drivers will ‘bully’ driverless cars if they spare the same road space. The fact that automated cars will be programmed to avoid collisions means that human drivers who pull out in front of the automated ones or push into traffic ahead of automated ones are likely to get away with their rash actions. I guess the tricky bit would be deciding which cars are automated and which are humans. If two human drivers try to out-bully each other, we’ll be…..well no different to the way things are at the moment in London.  
 

Death Bed

 
On his death bed, Jack turns to his wife and says, “Sarah, remember when our house burned down and we lost everything, you were right by my side.”
Hi wife smiles and says, “Yes Jack, I was.”
“And you remember when we had that bad car crash? When that lorry pulled out from nowhere, you were there with me.”
“Yes,” says Sarah. “I remember very well. It makes me shudder.”
“And Sarah, when those guys mugged us in Brazil. They held guns to our faces and they took my mother’s wedding ring. You were right by my side.”
“I remember Jack. It was very frightening.”
“And here we are Sarah. I am about to meet my maker and you are right by my side again.”
“Of course I am Jack.”
“Sarah, I am starting to think you are bad luck.”
 
 

Today's Major Economic Releases
 

 
Market BST Data/Event Previous Expected
GBP 09:30 Monetary Policy Committee Member Broadbent speaks     
EUR 10:30 Federal Open Market Committee Member Bullard speaks    
CAD 13:30 Canada: Core Consumer Price Index  0.2% 0.3%
CAD 13:30 Canada: Consumer Price Index 0.2% 0.1%
USD 14:30 Federal Open Market Committee Member Dudley speaks    
USD 14:30 Federal Open Market Committee Member George speaks    

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Daily Currency Analysis by David Johnson

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