Mixed start to trading following China disappointment

• Trade data cannot lift spirits

• IMF meeting with hot air surplus and little else

• US retail sales likely boosted by iPhone 5 sales

• EU council meeting on Thursday, UK CPI tomorrow

The lack of a credible change in policy from the IMF/G7 meeting in Tokyo made sure that the euro moved lower on the week versus its crosses, and reinforced investors’ fears that the distance between the current situation and a resolution may not be increasing at the moment, but certainly is not shrinking.

This morning has started in mixed fashion with the European political ambivalence being combated by what initially looked like strong Chinese trade figures. Exports were said to have grown by 9.9% in the month of September against expectations of a gain of around 5.5%. Some analysts suggest that this figure could be slightly strange in that it magnifies exports as a result of calendar and bank holidays within Korea, Taiwan and China itself.

Obviously, with fears that the “hard landing” in China has not yet been averted, this figure should help GDP for Q3 which is released later this week. At the moment the number has not helped risky assets so far, with the dollar slightly stronger and resource stocks losing out to defensives on the region’s equity markets.

Friday’s US consumer confidence figure came in a lot better than expected on Friday, ticking another box on the list of signs of a US recovery. The index rose to 83.1 from 78.3 previously, the highest level since 2007 which, although heartening, is very strange given the pressures that remain on the western world consumer. Dollar weakened slightly on the announcement but has made back those losses through the Asian session this morning.

Today is all about US retail sales with a considerable boost expected from the launch of the iPhone 5. Previous launches of the phone have seen significant boosts in retail spending in the appropriate months and this launch is said to have been the largest yet. The fall in unemployment and the increase in home prices will have also helped matters with car sales also likely to benefit from lower interest rates, making finance payments more attractive. The market expects a figure of 0.8% although the average beat in “iPhone months” has been around 0.7% so a figure of 1.5% would not be out of the realms of possibility. The figure is due at 13.30.

The key event of the week will once again come from Europe with an EU council meeting starting Thursday. The typical conversations around fiscal and banking unions will be amplified by the issues in Spain as we move closer to the regional elections. Headlines from recent meetings have shown some stability and allowed the euro some room to move higher; the market will be hoping for similar as long as a Spanish bailout remains a dream and not reality.

For the pound, tomorrow’s CPI number will be key and should provide consumers and policy makers with a welcome fillip as we expect a large drop. This is mainly due to the “falling-out” of last year’s energy price increases from utility companies, however, Friday’s news of further gas price increases ensure that any comfort from tomorrow’s number will be short-lived. Wednesday sees the latest minutes from the Bank of England. Thoughts will be around further stimulus following the Governor’s insistence that a rate cut will not be considered.

Have a great day.

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