- Mixed UK data leaves GBP rangebound
- Drop in oil stock weakens USD
We had mixed data from the UK economy overnight. The British Retail Consortium reported a recovery to 3.7% growth in retail activity in the year to April, a vast improvement on March's decline of 1.1%. However, the RICS house price index showed yet another fall of 23 percent in April. That's a balance of surveyors reporting lower. Rather than higher house prices in their catchment area. That is entirely at odds with the previous day's Halifax index showing a 5.0% average house price rise in the UK market overall. Sterling traders seem to have focussed on the retail numbers because the Pound recovered after spending most of Wednesday on the back foot. Sterling starts the day in the €1.16 and $1.30 area.
Chinese debt falls
The only other overnight news was a report showing increasing amounts of new loans being issued in China but that data was well below forecasts. The full amount of Chinese debt is actually dropping; a sign that consumers are less confident about the future maybe.
There's a distinct lack of European data today and nothing of note from the UK, so the morning trading session is likely to be rangebound but there is a lot to focus on this afternoon from Canada and the US.
Oil stocks down – dollar reacts
The two big events for the US session are the release of the Producer Price Index; a kind of foreteller of pending retail inflation, and we will get a speech from the. Chairman of the Federal Reserve. A significant drop in crude oil inventories yesterday gave the oil price a boost but weakened the USD to some degree. So there are a lot if conflicting datasets for the Fed to consider. The markets are all keen to know whether the Fed is going to ignore calls from the President for lower interest rates or whether they even have an appetite for higher rates. Perhaps Jerome Powell will have some answers for us.
Canada will publish trade balance data and a slight improvement in their trade deficit is what the markets want to see. If that isn't forthcoming there will be pressure on the Canadian Dollar.
And in a sign if the times, A mother from Dorset was alarmed when her 11-month-old daughter uttered her first word. She bypassed the usual mumma or dada and went straight to ‘Alexa’. It is a word her three-year-old brother uses all day and every day – presumably to get their amazon echo to find Disney and Pixar songs…or is that just me. It’s fine. I'll let it go.