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February 2017

Chinese trade levels leap

Published: Friday 10 February 2017

  • Chinese trade levels leap
  • Reserve Bank of Australia (RBA) lowers Aussie growth forecast
  • UK data should support GBP
As is often the case, a quiet data day is followed by a really busy one. Thursday brought us data showing a slowdown in Canadian house prices. That was at odds with the previous day’s positive housing starts data, but the Canadian Dollar took the discrepancy in its stride. This afternoon brings Canada’s employment data and that is forecast to be mixed, but the unemployment rate is expected to be unchanged at 6.9%. It is certainly higher than the Bank of Canada (BoC) would wish, but it is in the nature of a sparse population that the right skills are unlikely to be in the right geographical area. So, a higher base level of unemployment is not uncommon.
 
Overnight, we had Chinese trade data, which showed remarkable recovery in both imports and exports and a trade surplus that widened from $41 billion to $51 billion. Even taken with a pinch of salt, this would suggest that the underlying (real) data is better and that is good news for China’s overseas suppliers. 
 
Speaking of which, we also heard that Australian home loans rose less than expected last month. The Reserve Bank of Australia’s Statement on Monetary Policy offered very little enlightenment, other than that they lowered their growth projections for 2017. With these competing influences, it is hardly surprising that the Aussie Dollar stayed fairly flat.
 
Today continues with UK industrial and manufacturing data, which is forecast to be a little more upbeat than of late. Sterling has had a good couple of days and this may well send the Pound into the weekend with a bit of vim and vigour in its step. That will be especially true if this afternoon’s estimate of January Gross Domestic Product (GDP) growth is as good as the estimates suggest and in line with the Bank of England’s upbeat forecasts.
 
And if you thought civil unrest and street fighting was a new phenomenon, might I remind you that on this day in 1355, some student in the Swindlestock Tavern in Oxford fell out with the landlord over the quality of the beer he was serving. That led to a fight and then, when the university refused to surrender the two students to the Mayor, riots between the townsfolk and the university ensued. They lasted two days and left 63 scholars and 30 Oxonians dead. This was known as The St. Scholastica's Day riot and kind of proves something we all know…that you don’t want to mess with drunk students.
 

Joke

 
Scout Master: If a lion is chasing you, what would you do?
Cub Scout: I'd climb a tree.
Scout Master: if the lion climbs the tree?
Cub Scout: I would jump in the nearest lake and swim for it.
Scout Master: if the lion also jumps in the water and swims after you?
Cub Scout: Jeez…whose side are you on?

 

Today's Major Economic Releases
 

Market
BST
Data/Event
Previous
Expected
GBP 09:30 UK: Manufacturing Production month-on-month
1.3%
0.3%
GBP 09:30 UK: Goods Trade Balance -11.5b -12.2b
GBP 09:30 UK: Construction Output month-on-month -0.2% 1.1%
GBP 09:30 UK: Industrial Production month-on-month 2.1% -0.2%
CAD 13:30 Canada: Employment Change 53.7k -10.1k
CAD 13:30 Canada: Unemployment Rate 6.9% 6.9%
USD 13:30 US: Import Prices month-on-month 0.4% 0.4%
USD 19:00 US: Federal Budget Balance -27.5b -27.5b
 
Daily Currency Analysis by David Johnson