Sterling bounces a little ahead of monster UK data week

Today's Highlights

Sterling bounces a little ahead of monster UK data week

French elections will influence Euro

NZ trade surplus expected

 

Current Market Overview

So near and yet so far for England’s Rugby Union team. That loss, to a resurgent and frustrating Ireland, ended the 18 match winning streak and served as a great learning exercise, but England’s men, women and under 20s all won their own Six Nations competitions and it was only the men’s A Team  who failed to secure the grand slam. English rugby is in good form right now.

Sterling is a tad stronger this morning, too, but I don’t think it has anything to do with the rugby. Neither does it seem to have anything to do with Nicola Sturgeon demanding a referendum and getting shirty because she isn’t getting her own way. Sterling may have bounced back ahead of a big week of data. We’ll get inflation data, which should show consumer inflation running in lock step with wage growth. We will get government borrowing data, which is expected to be a tad worse than previously. We are expecting an uplift of between 2.5% and 2.8% in retail sales. We are also expecting an upbeat mortgage lending report. Even with Brexit battering at the door, Sterling could have a positive week.

UK data isn’t the only flavour this week though. The Euro has made some gains against the US Dollar ahead of a slew of purchasing managers indices (PMI), which are expected to be marginally better than before. We will also get French Gross Domestic Product (GDP) and more news of the state of play in the French Presidential elections. The fear for the Euro resides in the ongoing performance of Marine Le Pen, who has pledged to take France out of the EU and the Euro. Germany could find itself funding the whole of the Eurozone. Not a situation they would find comfortable.

The other data for the week includes a ‘no change’ decision from the Reserve Bank of New Zealand (RBNZ). I think the market perception is that this is a foregone conclusion, but the nature of the statement the RBNZ issues will influence the NZ Dollar; that is one to watch on Wednesday; and it is followed by what we expect will be a return to trade surplus in NZ’s trade figures on Thursday. That would certainly strengthen the Kiwi Dollar, so NZD buyers may opt to cut out some risk by covering some of their needs early in the week.

We will also get Canadian retail sales and inflation data this week. Small upticks in both are the most likely result and the Canadian Dollar is likely to strengthen if that is so. A recovery in commodity prices is adding to that pressure.

And, like most people, I am a fan of Adele, but my admiration grew when I heard that she told off a security guard in Melbourne for asking people to sit down during her show. If you have paid good money (and a lot of it, I assume) to see her live, the least you should be allowed to do is dance…oh and sing along…loudly….and off key probably.