US durable goods in shadow of Fed decision

Today's Highlights

Chinese share falls have broader impact

US GDP is key for GBP

US durable goods in shadow of Fed decision

FX Market Overview

If you think about it, no financial market could exist unless there were contrary views. The saying goes that when one man sells, another buys and they both think they are astute. So I wasn't surprised when I read two articles this morning, one after the other and their titles were "Grexit would still be best for the survival of the Eurozone" and "How the Greek Deal Could Destroy the Euro". You pays yer money and you makes yer choices, as another saying goes.

Whether Greece ongoing 'debate' with the rest of the EU is a good or a bad thing depends on your perspective but it is keeping the euro at the weaker end of its spectrum. As a side show, yesterday's German IFO business sentiment report reflected a very upbeat German business sector but that just served to highlight the vast chasm between Greece's need for bailout funds and Germany's lack of reliance on the rest of Europe. Other than an Italian consumer confidence index, there is little of interest coming from Europe today, so we can expect the euro to remain weak.

In fact, yesterday's data diary was as empty as lord Sewel's social calendar; devoid of any encouraging features. We did get a rise in US durable goods purchases; a 3.4% rise was the first since March and was better than the 2.7% forecast by the markets. The dollar benefitted from that but is unlikely to stay strong after what is expected to be a poor US consumer confidence index this afternoon. Having said that, traders may well keep their powder dry until after tomorrow's US interest rate decision. No change is forecast but the statement and press conference will be minutely analysed fro any hint of an early interest rate hike.

The race appears to be on between the Federal Reserve and the Bank of England to see who will be the first to raise interest rates. With inflation down in its boots, there would appear to be little pressure on the BOE but, if today's economic growth data suggests the UK economy is accelerating, that could all change. The markets are predicting a 0.6% rise on a quarterly basis when the 1st estimate for Q2 is announced. Anything above that will boost the pound but anything below...well I am sure you can work that out.

The bog news overnight was that the Chinses stock markets fell another 3% in early trade after falling an astonishing 8% through yesterday. The bubble that was bought with pure speculation has well and truly burst. It still seems odd that the highly controlling Chinese authorities fuelled the bubble in the first place and are now struggling to cope with the fall out. The impact on other Asian and Australasian economies is just starting to be felt. This is a story to watch.

In other news, I have a new hero. Jaume Torres, a Spanish businessman, has bought the rights to the name Ibiza Shore just so reality TV companies can't use it to promote yet another brain dead (my words not his) program. He, along with a lot of Ibizan locals, is worried about how that would tarnish the name of their beloved island. Jaume Torres I salute you. If only someone in Newcastle had thought of that a few years ago, it would have saved us all from the blight of Z list celebrities.

Quote

“Life begins at 40 — but so do fallen arches, rheumatism, faulty eyesight, and the tendency to tell a story to the same person, three or four times.”
William Feather