Sterling still strengthening… will it last?

• Sterling still gaining on hopes of Brexit conclusion

• US Federal Reserve to cut interest rates today – probably…

News that Saudi oil production is already back up to full capacity settled the oil markets a tad yesterday. That would normally strengthen the USD, but the Dollar weakened as markets became more convinced the US Federal Reserve would cut their base rate when they meet later today. Fed Chairman, Jerome Powell has been dropping big hints that this is the plan, so traders did what traders do and moved ahead of the actual event.

Sterling still gaining on hopes of a Brexit conclusion

In the UK, it is day two of the Supreme Court hearing on whether the suspension of parliament was lawful. No one has explained what would be different if Parliament was sitting anyway. Both sides are utterly entrenched, as it seems are the UK and EU sides. So progress is less likely than a Manchester United fan in Manchester.  Meanwhile, Jeremy Corbyn is likely to get a ridge in his backside if he continues with this fence sitting on the matter. This morning’s UK data includes inflation, which is forecast to have slipped to 1.8% and producer prices, which are forecast to have contracted slightly. Sterling continues to benefit from hopes that a conclusion will be found for the ongoing EU exit problems.

Euro struggles on German exports decline

Europe is facing yet another Spanish election (the fourth in four years) and further strife with the US over the European Central Bank’s (ECB) expansive monetary policy. The US see that as manipulation of the value of the Euro, but perhaps won’t voice that opinion. They may well add further tariffs to EU goods though; a real problem for the EU economy and especially Germany, which is facing declines in manufacturing and exports. The Euro is under the cosh, but this morning’s EU inflation numbers probably won’t change that.

Important North American data today

This afternoon brings US housing starts and building permits data; all useful for estimating confidence in the construction industry. That will be overshadowed by the aforementioned Federal Reserve rate cut though… always assuming they follow through on that.

We will get Canadian inflation data later and that is expected to be a little more upbeat. A rise from 2.0% to 2.2% is expected on the core figure and that might well strengthen the CAD.

Overnight tonight, we will see the New Zealand economic growth data. A slide from last Quarter’s 0.6% to 0.4% is the most widely expected outcome. The New Zealand Dollar has been on the back foot recently and there is a chance of hitting the NZ$2.00 to the Pound level. Orders in the market to snag that if it happens would be a useful option.

Good old fashioned 1960s comedy

And on this day in 1965, ‘I dream of Jeannie’ was first aired in the US. I think it must have been bought into the UK a few years later because I just remember being totally in love with Barbara Eden in my early teens. Sorry, did I write that out loud?