Retail boosts Sterling, Trump hurts the Dollar

Yesterday’s markets

12th January 2017

  • GBP - Manufacturing Production m/m: 1.3%
  • GBP - BOE Gov Carney Speaks
  • USD - Crude Oil Inventories: 4.1M
  • USD - President-Elect Trump Speaks

Data in the UK remains resilient with industrial and manufacturing production both coming in ahead of expectations at the highest for seven months.  The continued improvement of UK data has done little for Sterling with the Pound close to the years lows against the Dollar and Euro.  The data has changed the Bank of England’s mind, however, with Mark Carney yesterday saying that Brexit is no longer the largest risk to the UK’s financial stability.  Mr Carney defended the Bank’s previous predictions, suggesting the previous action taken cushioned the economy. He also highlighted the increase in inflation, and expectations for a further squeeze on household finances.

Yesterday was dominated by President Elect Trump’s press conference, which ultimately led to a significant drop in the Dollar.  The usual suspects were in the firing line, with strong rhetoric towards China and Mexico, whilst drug stocks and defence contractors were singled out as the Trump government will push for lower prices.

Today’s markets

11th January 2017

  • USD - Unemployment Claims
  • USD - Fed Chair Yellen Speaks
  • CNY - Trade Balance
  • EUR - Industrial Production m/m
  • USD - Import Prices m/m

With no data out of the UK for the rest of the week, attention turns to a ‘Super Thursday’ of Christmas retail updates.  Sainsbury, Tesco and M&S have already provided positive numbers for Christmas trading, with John Lewis still to come.  The general picture looks good for retail and the FTSE continues to hit all-time highs with improved data and weaker Sterling.

European data is led by annual German GDP, alongside European industrial production.  Expectations are for Europe and the Euro to see a gradual improvement in the economy.  Meanwhile in the US, import and export prices are expected to bounce back from November’s negative readings whilst initial jobless claims are expected to increase slightly.  The Dollar however continues to be more affected by Trumponomics and further commentary around the new government’s policy will no doubt provide further volatility.

Have a good day.