- Sterling bounces back on housing data but stalled on UK Government debt levels
- Speeches hold sway for rest of Monday
- US holiday this Thursday eyed with caution
As someone who receives at
least a couple of emails a day from widows and business partners of
African Princes and Russian oil tycoons, all promising massive returns
for help with illicit funds, I am amazed that anyone gets caught by
these blatant scams but apparently 5,000 Brits a year are defrauded of
an average of £31,000 from these fraudsters. Don’t get caught, the
government needs every penny they can get from you. Apparently we can
only just afford flying G Brown and T Blair into the Middle East for
photo-calls and foreign aid pledges but we haven’t got enough cash for
boots, armoured cars and bullets for the troops they are visiting. The
rise to £7 billion in Gordon Brown’s borrowing levels highlighted the
problem this morning and Sterling slid a tad on the news after
rebounding on Friday from the lows seen earlier in the week. Sterling
was also boosted overnight by property company Rightmove reporting the
fastest UK
house price growth in 2 years. There are so many housing market reports
these days that it is hard to know which to believe but there is a
generally positive mood from most reports and I know that is cold
comfort to those who have been having a nightmare selling their own
home. The rest of this week is light on data releases but those which
are on the horizon are important; we have numerous central bankers
speaking, retail and consumer numbers from Canada, German Ifo business
sentiment, UK GDP and the University of Michigan report. All are
potentially market moving but all will be greeted rather nervously
ahead of the US Thanksgiving day holiday on Thursday which will remove
most of the American markets for the last two days of the week.
Nevertheless, it is bound to be volatile and Thursday and Friday could
be the most erratic with reduced liquidity levels. On the sporting
front, England get to see if they can string a couple of wins together
against South Africa on Saturday. Last
weekend’s win wasn’t pretty but it was probably deserved overall. I
speak as an Englishman you understand.
Whilst this will be a quiet
week for market data, the Canadian Dollar is going to be lively. Not
only is the crude oil price fluctuating substantially but we also get
the Canadian retail sales data tomorrow and inflation numbers on
Wednesday. High street sales are expected to have cooled a tad and a
dip in inflation is expected as well; mostly due to the cost of energy.
Not only that but there are more signs of a US slowdown by the day and
the US of A absorbs 80 percent of Canadian exports. So it’s not
surprising if the Canadian Dollar remains weak and GBPCAD is
maintaining its slight upward trend even though the Pound has been out
of favour for almost a week now. However, the markets have factored in
weak Canadian data this week and so, if the data prints as it is
forecast, very little will happen in the GBPCAD exchange rate. The lack
of UK data will not help the Pound in this regard but if Canadian
shoppers have
been busier than expected or the drop in energy prices is not reflected
in retail prices, we could well see GBPCAD push back down to the bottom
of the current range at C$2.11 or so.
Sterling rebounded against
the US Dollar in the last 24 hours of trade and the reasons were mostly
USD related with Japanese Yen matters and gold price adjustments having
a knock on effect on the US Dollar’s value. Sterling itself was under
pressure through the main part of the week, partly because the Bank of
England delivered quite a confusing view on it’s interest rate plans.
The markets are factoring in one more interest rate hike in the Spring
but no more than that. We will get the minutes from the last interest
rate hiking meeting on Wednesday to assess what they really think. The
Pound was also battered by an improving US Dollar after improvement in
the US trade deficit and a relatively promising level of inward
investment flows into the US. The lack of UK data this week will mean
that US releases will hold sway and, oddly enough, the US holiday will
have an effect because traders may well close positions
and square their books before the four day break. As is often the case,
even in a quiet week, GBPUSD still volatile; offering buyers and seller
the right opportunity.
A small debt produces a debtor; a large one, an enemy
Publilius Syrus (1stcentury BC)
FX Research and Analysis undertaken by:
David Johnson - Halo Financial
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