Sterling holds up as UK-EU talks progress – or don’t

Well, Mr Johnson went to Luxembourg and his trip was either very successful or pointless, dependent on which side of the negotiations you prefer to believe. It largely bypassed the markets; Sterling held on to the gains it made last week and even strengthened a little more against the Euro. Boris Johnson was bored of the booing, so didn’t attend the press conference, but did say that the EU is fed up of the Brexit palaver and wants a deal done. Don’t we all. Today there is a vacuum where UK data usually sits in the diary. So the UK’s departure from the EU will be the main driving factor for the Pound. And I rather like the suggestion that Brexit has become a toxic word with negative connotations, so the term ‘UK Independence’ is a better term.

US Dollar weaker on oil strike

The US Dollar is a tad weaker against most other currencies after drone strikes on a Saudi oil refinery and a lot of confusion over the perpetrators of this provocative act. The oil price did spike, but fell back a little when it became clear that there was sufficient spare production capacity elsewhere to replace the 5% of global production that is at risk while the Abqaiq oil refinery is repaired.  We were told this morning that the repairs could take two weeks. On the trade front, the US has reached a trade agreement with Japan apparently and talks with China are progressing. Watch this space, I guess. This afternoon brings industrial production data from the US, which may well be a little more upbeat than last month’s.

Australian Dollar dips against Sterling on US-China worries

Overnight we saw the minutes from the last Reserve Bank of Australia (RBA) meeting, where they held the base rate at 1.0%. High on the agenda for the meeting was the tension between the US and China and they are right to be concerned when China is Australia’s number one export market and the US is their number two. House prices in Australia fell another 0.7% last quarter after a 3% drop the previous quarter. That wasn’t as bad as expected, but it is still a concern for the central bank. The Sterling – Australian Dollar rate is near its recent highs.

Euro could fall further today

The day ahead brings economic sentiment indices for the Eurozone and for Germany from the ZEW institute. We are expecting slight less awful numbers than last month but current conditions and expectations are both likely to remain in very negative territory. If this proves to be true, the Euro has further room to weaken.

Canadian Dollar could get bit of a boost

The other data for today is Canadian manufacturing sales. A smaller contraction than June’s 1.2% is forecast; sort of good, in a less bad way. That should strengthen the Canadian Dollar somewhat.

Chance to take advantage of New Zealand Dollar movement overnight

And overnight tonight we will see the dairy price data from New Zealand, which is very important for NZ exports. We will also see New Zealand’s current account balance. As I often mention, this is a good time to run overnight market orders to take advantage of any volatility.

Happy Holidays?

And the Daily Record is reporting on research that says that, if you put up your Christmas decorations early, you will be happier. Obviously your neighbours who won’t even think about Christmas until November will be fuming, but that isn’t covered in the report. Personally, I am a Christmas Eve kind of guy. Any sooner seems pre-emptive to me.