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2019

Sterling unmoved ahead of further political polls

Published: Monday 02 December 2019

  • Merkel’s coalition partners change leadership
  • Sharp downturn in Australian data
  • New Zealand Dollar stronger on ‘Trade Terms’

The vile, meaningless murders committed on London Bridge on Friday have generated some rather unsavoury politicking around crime and punishment but universal praise for the heroes who tackled the murderer before the police brought his attack to an end. The contrast is stark between the ex-prisoners who risked their own lives to stop the violence and the vile actions of a radicalised killer.

None of the politics have affected the Pound but we are due a number of election polls this week and some interesting data. We will get the manufacturing Purchasing Managers' Index (PMI) today but the more influential Service sector one is also due this week. We are 10 days from a general election and we expect more fireworks on that.
 
Merkel’s coalition partners change leadership

Angela Merkel must be glad she decided to leave politics. Her coalition partners had their conference at the weekend and the left wing of the party took charge. These new leaders of the SPD have vowed to gain more concessions from Mrs Merkel’s CDU party and that could jeopardise the coalition and perhaps Merkel’s government. Months of political uncertainty are set to ensue (Altogether people of Britain ‘welcome to our world’). The Euro is, as yet, unmoved but watch that space.
 
Chinese sentiment improves on PMI data

A slight rebound in China’s Purchasing Managers Index (PMI) has improved sentiment across the Asian markets. That, plus a threat of oil production restrictions have boosted the price of oil, caused selling in US treasuries, a drop in the value of that other safe haven, gold and weakened the USD a tad. That USD weakness may also have something to do with the US – China trade talks stalling after the US President’s overt support for Hong Kong protestors.
 
Sharp downturn in Australian data

The Australian Dollar was weakened by a very sharp drop of 8.1% in Australian building approvals. That was very much worse than the markets forecast of 0.4% growth. We also saw a 0.8% drop in company operating profits; down from 4.5% growth in Q2. The case for looser monetary policy from the RBA is building.


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New Zealand Dollar stronger on ‘Trade Terms'

Close neighbours, New Zealand, saw their currency strengthen as New Zealand’s Terms of Trade; the measure of purchasing power of New Zealand’s imports and exports, improved. So the Sterling – New Zealand Dollar rate was down below NZ$2.00 again this morning.

This week’s major economic releases

After a long weekend for many Americans, this week returns to normal data releases culminating in Friday’s release of the US employment report for November. That’s the first piece of the economic jigsaw for November and is therefore watched very closely. Pretty strong growth in employment is forecast; a Dollar strengthening event most probably.

And here is the big question of the week. Are you feeling Christmassy yet? We’d love to know.

Interesting Quote


History is an account mostly false, of events mostly unimportant, which are brought about by rulers, mostly knaves, and soldiers, mostly fools.

Ambrose Bierce

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