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October 2016

Chinese data unexpectedly improves

Published: Friday 14 October 2016

  • Chinese data unexpectedly improves
  • US retail sales improvement forecast
  • US and UK central bankers to speak later
The markets were a little surprised overnight by an uptick in Chinese Consumer Inflation and a positive reading on their Producer Prices as well. As you will know, the slowdown in China has been a major driver of weakness in the Asian markets and strength in the US Dollar. So this news calmed markets somewhat but the rampant US Dollar remains the untameable beast that is has been all week.
Today’s big events will be American in nature. The US Retail Sales data is expected to be more positive than last month’s, as is the Consumer Sentiment Index due from the University of Michigan. And Fed Chair, Janet Yellen is expected to hint at a December interest rate hike; something even more commentators will envisage if today’s data is as buoyant as forecasts suggest. So further USD strength before the weekend is perfectly possible.
As for the poor battered and bewildered unloved Pound, well we get a speech from the Governor of the Bank of England today. Mark Carney hasn’t been too successful in calming markets and has already alluded to not being able to do much more to boost the UK economy, so we probably cannot expect much from him.  So, as this is the Pound’s only respite today, I suspect Sterling will limp into the weekend like a wounded soldier.
And yesterday was marked by two stories; a deal between Tesco and Unilever to get Marmite back onto shelves and the escape of a Gorilla from his enclosure at London Zoo. There are plenty of suggestions that the Gorilla was trying to panic buy Marmite before it was too late; that he was seen applying for an Irish passport, that he was caught trying to ambush Donald Trump to save the human race from extinction and that he wanted to dance with Ed Balls. His motive’s it seems are unknown.


Politics: - The art of looking for trouble, finding it, misdiagnosing it and then incorrectly applying the wrong remedies.
Under democracy one party always devotes its chief energies to trying to prove that the other party is unfit to rule — and both commonly succeed, and are right.
H.L. Mencken
Those who are too smart to engage in politics are punished by being governed by those who are dumber.
Politicians are people who, when they see light at the end of the tunnel, go out and buy some more tunnel.
John Quinton 

Today's Major Economic Releases 

Market BST Data/Event Previous Expected
GBP 09:30 Bank of England Credit Conditions Survey    
GBP 09:30 UK: Construction Output month-on-month 0.0% 0.0%
EUR 10:00 EU: Trade Balance 20.0b 20.5b
GBP 12:45 MPC Member Forbes speaks    
USD 13:30 US: Core Retail Sales month-on-month -0.1% 0.4%
USD 13:30 US: Producer Price Index (PPI) 0.0% 0.2%
USD 13:30 US: Retail Sales month-on-month -0.3% 0.6%
USD 13:30 US: Core Producer Price Index (PPI) 0.1% 0.1%
USD 13:30 FOMC Member Rosengren speaks    
USD 15:00 University of Michigan Consumer Sentiment 91.2 92.1
USD 18:30 Fed Chair Yellen speaks    

Daily Currency Analysis by David Johnson

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