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November 2017

Sterling flat after wage growth concerns

Published: Wednesday 08 November 2017

  • Sterling flat after wage growth concerns
  • Reserve Bank of New Zealand (RBNZ) likely on hold but remit may be changing 
By David Johnson
 

Sterling continues to remain flat

A survey by the Recruitment and Employment Confederation shows UK wages starting to rise amidst a reduction in EU workers available for employment. If this is right, then the Bank of England (BoE) may be proven to be insightful in their interest rate hike but may have to revise their cautious forecasts for wage growth and maybe for further interest rate hikes. Sterling hasn’t risen on the news, so maybe traders think the report is not so influential.

Trump lands in China for talks
 
In a remarkably well timed release, China’s trade surplus against the US has narrowed on the day the US President arrives for a state visit. US companies are angry at what are seen as restrictive trade practices by China and a complete disregard for copyright laws.  So this unexpected development may ease pressures during the talks between the US and Chinese Presidents. Not by much I would guess.

Markets await Reserve Bank of New Zealand rate decision
 
The Reserve Bank of New Zealand (RBNZ) meets later tonight, to set the NZ base interest rate. No change is expected from them at this meeting, but the New NZ Finance Minister has spoken of a change in the RBNZ’s remit. If they are tasked with achieving full employment as well as inflation targets, we may well see lower interest rates and for longer. It will be interesting to see whether they comment on that in their statement later on.
 
The rest of Wednesday is a gaping chasm where there should be data. Canadian housing starts and building permits data is about as enthralling as it gets but Thursday is awash with reasons to be volatile. Roll on Thursday then.
 
Until then, take a moment to remember that one year ago today, Donald Trump was elected as the 45th president of the US of A. It’s hard to believe isn’t it. We’ve hardly heard from the guy in that year. It’s like he doesn’t even exist.
 
New you
 
Shirley was rushed to the hospital after a heart attack.  For a moment, she saw the tunnel with the white light and was standing at the pearly gates. 
 
Saint Peter looked at his list and said, “Don’t worry Shirley. You’re not due yet. You have another fifty years to live. Back you go.”  She woke up in the hospital and decided that since she was going to live for that long, she would transform herself.
 
Over the next few months she had every part of her body nipped and tucked and lifted and tanned etc etc etc. Two months later she was out shopping when she was run over by a truck.  She found herself back at the Pearly Gates and St Peter started filling in the forms to admit her to heaven. 
 
Distraught, she said, "Hold on. You told me I had fifty years left!” St Peter signed the bottom of the page, completing the admission form and then took a long hard look at her before getting her to turn around. He said, “Sorry Shirley, I didn't recognize you."

Today's Major Economic Releases

Market BST Data/Event Previous Expected
CAD 13:15 Canada: Housing Starts 217k 211k
CAD 13:30 Canada: Building Permits -5.5% 0.7%
USD 15:30 US: Crude Oil Inventories -2.4m -2.5m
NZD 20:00 Reserve Bank of New Zealand Official Cash Rate 1.75% 1.75%
NZD 20:00 Reserve Bank of New Zealand Rate Statement    
NZD 20:00 Reserve Bank of New Zealand Monetary Policy Statement    
NZD 21:00 Reserve Bank of New Zealand Press Conference    
 

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