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October 2017

Sterling steady ahead of big data day

Published: Thursday 10 August 2017

  • Sterling steady ahead of big data day
  • Australian business confidence rebounds
  • Catalan independence declaration imminent
By David Johnson
Monday went off without much drama. The US markets were closed and the data diary was about as exciting as beige paint on a beige thing.
Things heated up overnight with a very solid showing from Australia’s business confidence index. That was up on the week and saw the previous week’s negative data revised upward. The Aussie Dollar didn’t gain a lot, but that was probably more to do with recent comments from one Reserve Bank of Australia (RBA) member who talked of interest rate cuts as a possibility. We get the Aussie consumer confidence index tonight and that is forecast to be positive as well. So AUD strength is likely if that proves to be accurate. 
In the Northern Hemisphere, there is a chance the Catalan Parliament will declare independence from Spain later today.  The President of the Generalitat of Catalonia, Carles Puigdemont says that declaration will be “gradually effective”. That sounds Brexit-like doesn’t it. The Euro is pretty stable in spite of this news and there really isn’t a lot of data to focus on today, so the Catalan story will dominate the Euro market. 
There is plenty for Sterling traders to watch today. Industrial and manufacturing data is forecast strong, the trade deficit is expected to have contracted slightly, construction output is expected to have stood still but that would be better than the 0.4% contraction we saw last month but the NIESR Gross Domestic Product (GDP) estimate may be less encouraging. Sterling is sitting just below €1.12 and around US$ 1.31. These are lower than a few weeks ago but this is by no means a collapse in the Pound. Good news could still lift Sterling, so if you are a GBP buyer, you may wish to protect yourself before this morning’s data.
This afternoon brings Canadian housing market data. The Canadian Dollar is treading water but has the potential to strengthen if this data is upbeat.
There isn’t much from the US today other than the Minneapolis Federal Reserve (Fed) president speaking. However, we have an embarrassment of news tomorrow when several Fed chairs will be speaking and the minutes from the last Federal Reserve Open Market Committee meeting will be published. All everyone wants to know is ‘when will the monetary tightening start again’. Answer that and we will all be happy ladies and gentlemen of the Fed. If that is a sooner rather than later date, the USD will strengthen and vice versa.
And the law of unintended consequences has a victim. Austria has banned the wearing of full veil burkas but the chap wearing a shark suit outside a store called McShark was a tad taken aback when police officers told him he had to take off the shark head. He protested, saying he was ‘just doing his job’ and was promptly arrested for flouting the law. I wonder how that is going to work for surgeons and asbestos removers; oh and bee keepers and motorcyclists and fencing coaches…. 
For more information, infographics and the latest currency insights, visit www.halofinancial.com/news
Fire fighters
A fire started inside the local chemical plant. It wasn't long before it exploded into flames and an alarm went out to all the fire departments for miles around.
After fighting the fire for over an hour, the chemical company president approached the fire chief and said, "All of our secret formulas are in the vault in the centre of the plant. They must be saved or the company is finished! I'll give $50,000 to the engine company that brings them out safely!"
As soon as the chief heard this, he ordered the firemen to strengthen their attack on the blaze but to no avail.
After two more hours of attacking the fire, the president of the company offered $100,000 to the engine company that could bring out the company's secret files.
Just then a long siren was heard in the distance and another fire truck came into sight.
It was a local volunteer crew, composed entirely of men over 65.
To everyone’s amazement the 40 year old Dennis fire engine raced through the chemical plant gates and drove straight into the middle of the inferno.
In the distance the other firemen watched as the old-timers hopped off of their rig and began to fight the fire with a furious effort like none had never seen before.
After an hour of intense fighting the volunteer company had extinguished the fire and saved the secret formulas.
The chemical company president was overjoyed and announced he'd double the reward to $200,000 and walked over to personally thank each of the volunteers.
After thanking each of the old men individually, the president asked the group what they intended to do with the reward money.
The fire truck driver looked him right in the eye and said, "The first thing we’re going to do is fix the brakes on that damned truck."

Today's major economic releases

Market BST Data/Event Previous Expected
EUR All Day The Economic and Financial Affairs Council Meetings    
GBP 09:30 UK: Manufacturing Production 0.5% 0.2%
GBP 09:30 UK: Goods Trade Balance -11.6b -11.4b
GBP 09:30 UK: Construction Output -0.9% 0.0%
GBP 09:30 UK: Industrial Production 0.2% 0.2%
CAD 13:15 Canada: Housing Starts 223k 221k
USD 15:00 Federal Open Market Committee Member Kashkari Speaks