- Sterling regains some of its losses
- Strong Japanese data ahead of two week break
- US GDP expected weaker
The US Dollar strengthened through Thursday after a surge in durable goods orders. That boosted the USD in spite of the weekly jobless benefits claimant count hitting a 10 week high. The Dollar’s strength also happened in spite of oil markets hitting a 2019 high with Brent crude topping out around $75 a barrel. There is usually a reverse correlation between the price of crude oil and the currency it is traded in; the USD.
Sterling stepped up after the CBI reported that retail sales rose for the first time since November 2018. i.e. in the black Friday pre-Christmas period. Better weather and the positioning of Easter have been cited as reasons for the uptick. We will get their industrial trends survey this morning. That too is expected to return a positive result. As long as this morning’s mortgage data is not too harsh, Sterling could well recover more of the losses it suffered earlier in the week.
Overnight we had Japanese industrial production data which was very strong. That took the markets by surprise. The Yen, which had been weakening ahead of the 10 day holiday to make the enthroning of the new emperor, strengthened and should retain that strength into the weekend. However, with no Japanese traders at their desks, it will be vulnerable for the next fortnight.
This afternoon brings US consumer sentiment indices but more importantly, we will see the Q1 US economic growth data. A drop from 2.2% last quarter to around 2.0% in Q1 will add weight to the arguments that the US federal reserve should not only hold off from any further interest rate hikes but should perhaps think of a rate cut. The USD has been very strong this week, so some profit taking (very likely if the data is weaker than 2%) would weaken the USD.
Next week is littered with national holidays. Britain celebrates May Day a week Monday but most countries do it on May 1st because, well…that’s May Day. Some countries like Greece will celebrate Easter on Friday and Monday and China, India and Japan all have public holidays through next week and I have already mentioned the extended break in Japan. We will also get the Bank of England’s interest decision next week and a Federal Reserve interest rate decision to boot. If ever there was a week in which it was worth placing an automated order to try to capture that elusive rate or to protect against the worst of the market volatility, this is the one. We had heaps of orders triggered over the UK Easter bank holiday weekend. Well done to those who benefitted from that.
And there is a new offering online from a company called Fake a Vacation. If you can’t afford an exotic foreign trip this year, they will Photoshop your pictures onto images from LA, the Grand Canyon or Disneyland or wherever, for you to share on social media. Where will all the fakery end. Just because your Facebook page says you are worldly, it doesn’t make it a fact.
Anyway I am off to Jupiter for the weekend. I’ll send you some snaps.