Sterling still in positive territory

Today's Highlights

Sterling still in positive territory

Eurozone inflation awaited

Hawkish Fed Chair worries wider global market

FX Market Overview

I am sorry for the late running of this morning's Daily Currency insight. You can do as I am doing and blame Southern Rail which offers a perfect lesson in customer service. i.e. a lesson in how to consistently get things wrong. A late running train with half the normal number of carriages and with the heating on. I have witnesses the commuter version of a perfect storm........and then I hear of Palestinians being given 5 hours to get the shopping in before more bombs land on them and I think of the expression, 'First world problems'. Instantly my whingeing is put back into proportion with a thud.

Suitably chastened, I return to the matter of the financial markets. The Bank of Japan has upgraded their forecasts for Japanese economic growth for the first time in six months and that had given the Yen a bit of vim and vigour.

The big talking point for the Pound yesterday was the improved employment data following on from a rise in consumer prices inflation and many appear to have missed one element which is troubling. At a time when retail prices are rising, energy prices are moving almost inexorably higher and house prices are a little bit insane in some parts of the country, wages growth is practically non-existent. That must be a worry for the Bank of England as they contemplate the effects and timing of interest rate hikes and that is why I think they will delay the first hike for longer than many believe. Sterling has reacted to the positives and, as yet, ignored the negatives so we will see if the Pound can break through to €1.2750 and $1.73 in the days ahead.

Across the Pond, there is also speculation about the timing of the Federal Reserve's monetary tightening. That has repercussions within and without the US economy. Cheap US money has fuelled growth in Latin America and Asia as well as some other economies; so the effect of tighter US policy will be felt in these economies as well. This has come into sharp focus after fed Chair Janet Yellen was much more hawkish in her testimony to Congress earlier in the week.

And across the Channel, today's big news will be the Eurozone inflation data. It is only the final estimate of the June data and few surprises are expected but, at a time when the ECB is struggling to agree on how to stimulate growth, any threat of deflation is has really negative influence on the Euro. So any downgrade to the inflation figure will be negative for the shared currency.

Away from the markets, a warning to anyone who hates spiders. Don't use a can of paint spray and a lighter to exterminate the little critters. I know you may not have considered that as an option but one chap in Seattle used these tools to create an improvised blowtorch and the resulting blaze caused $60,000 worth of damage. The man and his mum managed to get out of the house without injury but spray paint and lighters are not considered a sensible spider repellent in an indoor situation. That public safety notice was brought to you by Halo Financial.