US Dollar and Chinese banknotes next to each other

 

  • German growth expected at worst in 7 years
  • Rand strength should follow forecast improvement in Retail Sales

 

The US-China trade deal due to be signed today should not be considered as a destination for this process; more a comfort break on an extended journey. In fact this agreement doesn’t even get the two sides back to the levels they were at before the US President started throwing his weight around. It seems that fact has dawned on the financial markets a bit late because we have seen the signs of risk management amongst investors as shares slipped, gold rose and the Yen and US Dollar both strengthened; the USD getting the better of it.

 

US and Chinese flags next to each other

China-US trade war concept – flag of China and the United States

 

German growth expected at worst in 7 years

Today’s, arguable more important, news will be data showing, what is expected to be the worst German Gross Domestic Product (GDP) growth rate in 7 years. The forecasts are for 0.5% annualised growth; down from 1.5% in the previous year. The list of influences is pretty long and includes China’s slowdown, the extended Brexit period, a more general global slowdown and many more factors. Many agree that the golden decade for German is winding down. The Euro is likely to weaken a tad if this data is as poor as or worse than anticipated. We also have Eurozone industrial production and their trade balance as well. So those may also shift the Euro around.

 

Sterling’s stability pending on economic data

Sterling is treading water around USD 1.30 and EUR 1.17 ahead of this morning’s inflation data release. 1.5% is the forecast for Consumer Price Inflation; roughly in line with last month’s data. Similar stability is expected in the Retail Price Index (RPI) and other permutations of the consumer data.  However, the input side of producer prices is expected to still be in negative territory but not as bad as last month. Sterling has room to strengthen if the data is better than forecast.

 

 

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Rand strength should follow forecast improvement in Retail Sales

The South African Rand ought to strengthen after 11.00am when the retail sales data is expected to show 1.5% growth in the year to November; a sharply better result than the October figure of just 0.3%.

 

Today’s major economic releases

Aside from the aforementioned US-China trade deal, there is a barrage of US data today. Mortgage, produce prices and crude oil inventory data is all set to reach us today alongside a number of Federal Reserve speakers. We will also see the Beige Book later. That is a regional view of the US economy that forms part of the next Federal Reserve rate setting meeting’s agenda. So it is influential.

And much later in the day we will see Japan’s Tankan index alongside machinery orders and core producer prices. A general improvement is forecast for all of this data, so be prepared for a stronger Yen before the UK opens for business tomorrow.

 

Horse meat

And on this day in 2013, horse meat was found in burgers being sold in the UK and Ireland. I hope none of you were affected by that but, if you were, please stamp your right hoof three times.

 

How about that!

A white horse walks into a pub and asks for a whisky.
The landlord says: “Hey, what a coincidence. We’ve got a whisky named after you.”
The horse replies: “Amazing. It would be rude not to try it, wouldn’t it. I’ll have a glass of Rupert then.”