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October 2016

Sterling levels off after employment data

Published: Thursday 20 October 2016

  • Sterling levels off after employment data
  • USD remain strong in spite of looming Presidential Election
The final US Presidential debate was as terse and tetchy as the previous two. I have a feeling - and don’t judge me if I am wrong – that these two don’t like each other. It’s just a hunch. Either way, we are 19 days away from America making its mind up and there is a lot riding on the outcome. In spite of this clear and present danger, the US Dollar is still insanely strong against all other currencies. That strength was helped by a very bullish Beige Book (sounds like an oxymoron, doesn’t it). This is a regional look at the US economy and it forms part of the next Federal Reserve (FED) rate setting meeting agenda, so it is influential.
Yesterday’s mediocre UK Employment data was enough to stop the GBP rally that ensured after strong inflation data the day before. And Sterling hasn’t regained that upward momentum in spite of pretty strong UK Retail Sales data; numbers that kind of mock the naysayers who are trying to convince us that Britain is heading for hell in a handcart in the post-Brexit-vote-period. No it isn’t, apparently and the current Chancellor of the Exchequer has distanced himself from the doom-laden forecasts of the previous Chancellor whose name was……it’s on the tip of my tongue…….nope. Forgotten him. That’s politics for you.
The Australian Dollar remains strong after the Aussie Unemployment rate dropped to 5.6% as the number of people participating in the labour market declined slightly. This is further confirmation that Australian interest rates are unlikely to fall any time soon.
The Bank of Canada is hinting at further interest rate cuts to try to stimulate growth in a sluggish Canadian economy. They left their base rate alone at 0.50% but flirted with a rate cut at this meeting and may well move that way in the latter part of the year unless the economy picks up. The GBPCAD exchange rate picked up a little due to this and the UK data.
There is a bit of weekly employment data from the US later on but other than this, it is a quiet one. It is a good day for Wendy and John Booth though. They were out walking on a beach in Essex when they discovered what turned out to be a 3-million-year old Mammoth tooth. To be fair, it looks like a bit of weathered rock and what possessed them to take it home is nobody’s business but theirs. Nonetheless, they have a very interesting conversation starter on the mantelpiece.

In the park

A businesswoman is sitting in the sun on a park bench. The warmth of the midday sunshine makes her sleepy, so she pops her feet up on the bench and starts to doze.
She is woken by a very dishevelled old guy with an unkempt beard and the breath of a thousand sewers. “Give us a kiss then,” says the old man.
“Leave me alone,” says the woman. “I am not that kind of girl.”
“So,” says the old guy. “Why did you invite yourself into my bed then?”


Today's Major Economic Releases 

Market BST Data/Event Previous Expected
GBP 09:30 UK: Retail Sales month-on-month -0.2% 0.3%
EUR Day One EU Economic Summit    
EUR 12:45 EU: Minimum Bid Rate 0.00% 0.00%
EUR 13:30 ECB Press Conference    
USD 13:30 Philly Fed Manufacturing Index 12.8 5.2
USD 13:30 US: Unemployment Claims 246k 251k
USD 15:00 US: Existing Home Sales 5.33m 5.36m

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Daily Currency Analysis by David Johnson

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