Worrying UK trade deals

Today's news headlines:

  • ‘The Tories secretly fear Trump could wreck Johnson’s election’ – Next week’s NATO meeting hosted by Boris Johnson in Hertfordshire could be a chance for Corbyn to thwart the Tory poll lead. Corbyn has recently warned that Johnson and Trump will form a free trade deal that involves the sale of the NHS. Trump has previously said NHS access for US companies would be one of the things ‘on the table’, although he more recently withdrew the comment. (Bloomberg)
  • ‘Hong Kong protesters call for weekend rallies, police quit campus battleground’ – After a week of relative calm in the Asian financial hub, activists took to social media to announce further protests aimed at keeping momentum behind their cause. On Friday, police withdrew from a university campus that was one of the worst hit areas of violent protests. (Thomson Reuters)

Focusing on the consumer

In order to speculate that global growth will pick up in 2020, we require a detailed understanding of the consumer, who has kept the economic engine turning even while other parts of the machinery have faltered. Just this morning, numerous releases we might normally overlook, can help refresh our view of the economic landscape.

Japan has recently implemented a sales tax at a time when the Bank of Japan have softened their single-minded inflation building approach. Quite naturally, the fear was that this combination of factors might undermine the years of progress made to restore a positive inflationary environment to the land of the rising sun. Just this morning, Japanese Consumer Confidence, which has been falling since last year, has rebounded strongly from the past two month’s doldrums. The picture remains complex, but this is certainly an encouraging sight.

Turning to Europe, German Retails Sales have shrunk 1.9% since last month which heightens our concern about the German economy. It’s worth mentioning that monthly readings are notoriously noisy, but the year-on-year figure also displayed considerable deterioration. On the other hand, France has shown an unexpected uptick in Consumer Spending on a monthly basis, but the yearly figure still shows contraction. To put this in context, all 2019 French Consumer Spending figures have been markedly lower than the prior 4 years.

Bottom Line: We don’t want to be alarmist, because there are some good points to consider, but it’s important to focus on the heart of the matter. One isn’t terribly worried about the fantastic paint job on their car when the engine won’t start. Those projecting a bottoming in European economic performance should keep an open mind. 


Cable tested the 1.2950 mark twice in yesterday’s session as the US celebrated Thanksgiving. The pair has since come off, finding support at the 1.29 figure. The pair continues trading in its tight range as the UK edges closer to its general election. The pair may stay at the lower end of its range as the US Dollar index stays supported at its 50-daily moving average.


The currency cross marked its highest point since the beginning of May yesterday as the pair inches closer to the 1.18 figure. The Euro index remains anchored to year-to-date lows having failed to break above its 50-daily moving average last week.


The pair continues to test the 1.10 level, moving no more than 20 pips either side of the big figure. This morning’s European data has so far left the pair unchanged, although month-end flows around hourly fixing rates may bring some intra-day volatility as the US returns from Thanksgiving.