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October 2015

Daily Currency Insight

Published: Friday 16 October 2015


It seems only a few weeks ago that the world and his brother was urging us all to get heavily involved in the BRIC emerging economies. Brazil, Russia, India and China were, we were assured, the next big thing but things look a little different today. Brazil's bonds have been reduced to virtually junk status by the credit ratings agencies, Russia's incursions into Ukraine and strategic bombing in Syria have rendered them a pariah state in some circles, China's economy continues to slow and is causing all manner of drama in reliant economies around the globe and the Bank of India's stranglehold on the Rupee makes it increasingly awkward to do business with Indian exporters. I wonder what we can be guaranteed is the next big thing?
 
Meanwhile, one of the economies directly impacted by China's slowdown announced fairly neutral inflation data overnight. New Zealand consumer inflation proved to be in line with expectations at 0.3% on the month. I don't really need to say any more about that; the markets did as expected and sold some NZ Dollars but the bounce in the GBP-NZD rate was barely 1%.
 
Yesterday's US data included a decline in the number of fresh applicants for unemployment welfare and consumer inflation that was marginally above expectations. The US equities markets liked the news because none of it was enough to prompt the Federal Reserve to accelerate their interest rate hike plans.
 
Sterling has bounced by 3 cents or so against the Euro over the last 72 hours. Sterling had become oversold from a technical perspective anyway but this week's UK data has reassured traders that Britain's economy is a beacon of positivity amidst a sea of doom and gloom. Maybe I am overstating it but UK PLC does look a better bet than most other industrialised economies.
 
Today's data diary has two bright spots and then we are into the weekend. At 09:00 GMT, we get the Eurozone inflation data. In truth there really isn't any inflation to speak of anywhere. The EZ data will be in the area of -0.1% on the year as falling commodity prices and a lack of growth force prices to fall. The Euro is unlikely to move much on the data because it is par for the course at the moment.
 
At 13:15 GMT, we will see US industrial production figures. Another small but less substantial decline is expected. Last month's figure was minus 0.4% and we are expecting minus 0.2%. That definitely doesn't put any pressure on the Federal Reserve to raise rates, so the US Dollar may slip a little further. The Sterling – USD rate is up a couple of cents on the week and could make it to $1.56 without too much effort.
 
Now we have all bought things on a whim; that pair of gold shoes you never wear, the rowing machine that you used for three days before it got left in the garage, the selfie stick that was just too embarrassing to use in public....or maybe that's just me.  Well Jeff Woolmer took it to a whole new level when he bought a seven tonne ex-army tank and realised very quickly he would have to move house in order to accommodate it. He bid £9,000 on a specialist auction site but was very surprised when he got a call asking when he was going to collect the tank he'd bought. I've got to say, it has given me some ideas about how to improve the behaviour of other drivers during my commute.
 
 
Short sharp jokes
 
•          There was a prison break and I saw a midget climb up the fence. As he jumped down he sneered at me             and I thought, well that’s a little condescending.
•          It’s hard to explain puns to kleptomaniacs because they always take things literally.
•          I used to think the brain was the most important organ in the body and then I thought, "Who's telling me            that."
•          I see corduroy pillows are making headlines
•          Not sure what the best part about living in Switzerland is but the flag is a big plus.
•          Why didn't the lifeguard save the Hippie? Too far out.
•          You know those white boards that you write on with felt pens and then you wipe them off? They're                    remarkable.