- Sterling helped by strong service sector
- USD weaker on commodity rises
- Australia has a trade surplus for the first time in nearly 3 years
If you are in Spain, Happy Three Kings Day and for everyone else, get those decorations down now!
The Bank of England’s Chief Economist, Andrew Haldane, accepted that the BoE got it wrong about Brexit and its effects and failed to predict the 2008 economic crash. Is there anyone who doesn’t already realise that? Economists are the worst people to ask for predictions; especially when the events are unprecedented. Financial news thumbed its nose at the BoE again yesterday when the UK Service sector data showed the most improvement in over a year. Sterling levelled off and didn’t advance on the news, but, with oil and commodity prices rising and the UK being a net importer, that isn’t so surprising.
We heard overnight that the Australian trade balance switched into a surplus for the first time in almost three years in November. The A$1.2 billion surplus is driven by that same rise in commodity prices that is dampening the Pound and weakening the US Dollar. The Aussie Dollar strengthened – unsurprisingly.
This afternoon brings the December US employment report. A gain of 175,000 jobs - or thereabouts - is expected. Assuming the actual data is somewhere in that region, the USD is unlikely to shift too much. The Dollar has weakened over the past few days following the Federal Reserve’s less hawkish tone and in response to stronger commodity prices, as shown in the Minutes from their last Board meeting. They regard the future fiscal policy of the US with "considerable uncertainty". That is perhaps not surprising when an untried, untested and unpredictable US President is about to take office.
This afternoon also brings Canadian employment data, as well as their international trade data. The forecasts are mixed, so there may well be volatility in the Canadian dollar at around 13.30 UK time.
And this time next week, it will be Friday 13th. You may think the superstition over this date combination is all nonsense, but there are plenty of instances of negative news stories on Friday the 13ths of old. These include the Italian cruise liner, Costa Concordia, running aground; the failure of a United Airlines deal, dropping equities markets by 7% in 1989; and there are other instances. However, flights booked for Friday the 13th can be the cheapest available. I mention this a week early so you have time to book. Good luck!
A very high level and rather smug lawyer gets pulled over by a West Virginia sheriff. The sheriff walks up to the driver’s door of the Mercedes and asks for the driver’s license and registration.
The lawyer asks, "What for?"
The sheriff responds, "You didn't come to a complete stop at the stop sign."
The lawyer says, "I slowed down and no one was coming."
"So you didn’t come to a complete stop. License and registration please," says the impatient sheriff.
The lawyer says, "If you can show me the legal difference between slow down and stop, I'll give you my license and registration and you can give me the ticket. If not, you let me go and don't give me the ticket."
The sheriff says, "That sounds fair, please exit your vehicle." The lawyer steps out and the sheriff takes out his nightstick and starts hitting the lawyer with it.
The sheriff says, "Now, do you want me to stop or just slow down?"
Daily Currency Insight by David Johnson
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