Today's Highlights
IMF warns of downgraded growth forecasts
UK retail sales hit by Olympics
UK government debt data awaited
FX Market Overview
It seems we were all so busy cheering on Team GB that we forgot to go out and shop. That appears to be the conclusion drawn from the UK retail sales data which showed a 0.2% drop in activity and a surprisingly sharp drop of 6.7% in online sales. Perhaps scaring everyone into staying away from London wasn’t such a good plan but the more likely problem is that no one has any money because prices are still rising but wages aren’t. The markets were expecting the data to be rather worse than that so the figures didn’t dent Sterling. Quite the contrary in fact, Sterling recovered some of the losses from previous days after poorer than expected Eurozone data. However, this morning’s Public sector debt data is likely to show no progress sin the government’s plans to cut borrowing and that will heap political and economic pressure on the Chancellor to act to boost growth and jobs in order to get tax receipts up. That would tie in with the views expressed in the last Bank of England meeting.
A spate of poor Eurozone purchasing managers indices left the Euro free to drop some of the gains it had made earlier in the week and, to add to the negative tone, rumours abound that Greece may be allowed to write off some of the first tranche of aid it received from the EU as long as they meet their cost cutting commitments. I am not sure what German taxpayers will think about that but I don’t think the news came as a surprise to the more seasoned campaigners in the financial markets. There is a distinct lack of Eurozone data today so unless something interesting comes out of the Greek cost cutting meetings, the Euro may well give up some more of its strength against the US Dollar and perhaps the Pound.
The US Dollar was emboldened by news that the Philadelphia Fed index rose from -7.1 last month to a negative but slightly better -1.9 in September. The forecasts were for something in the order of -4.5, so although this was still a minus reading, it was a distinct improvement. Shares rose on the news on both sides of the Atlantic and the US Dollar gained ground initially but slipped in later trade as funds flowed out in search of higher yielding assets overseas.
The Canadian Dollar weakened yesterday ahead of today’s Canadian inflation data and on expectations of further global economic slowdown. The international Monetary Fund is warning that it will downgrade its growth forecasts by a few basis points and that is weighing on all the commodity producing countries which would expect that to dampen demand for their exports. However, not all IMF reports are negative; IMF Managing Director, Christine Lagarde says the amount of money needed to rescue Spain’s banks is much less than originally feared and that is quite a positive for the Eurozone and potentially the rest of the world.
And finally, do you remember the story a few weeks ago about the pensioner who tried to restore a 120 year old fresco on her church wall? Well the story isn’t over; having altered the image of Jesus for the worse (I think it is fair to say) 81 year old Cecelia Gimenez’s story went around the globe and visitors are flocking to the Sanctuary of Mercy church where an admission fee has been imposed. Mrs Gimenez, who was mocked to the point where she went into hiding, is so incensed by her treatment that she has now demanded royalties on her ‘work’ relating to the €2,000 euros the church collected in the 1st 4 days and on-going admission receipts. It seems only fair. After all, Tracey Emin made money out of her slovenly bed so why not an income from a painting by numbers rendition of a fresco called ‘Ecco Homo’.
Quote
No great artist ever sees things as they really are. If he did, he would cease to be an artist.
Oscar Wilde
