Sterling holds gains amid turbulent Brexit talks

• Sterling holds but pauses as DUP draws opportunist lines in the sand
• Mixed Australian economic data
• US diary bursting at the seams

Sterling had its third day of gains as EU and UK negotiators appeared to be edging ever closer to a deal on the UK’s emergence from EU control. The rumours were that the deal was dead in the water, then it was back on and then….then there was a problem…then it was resolved……rinse and repeat ad infinitum. That was the kind of day it was on Wednesday. Overnight we have heard that the DUP wants more change before they will support the deal and yet the Pound has held on to its gains.  More talks will take place in Brussels today, so hang on to your hats. Meanwhile, UK retail sales for September ought to be reasonably upbeat, with some forecasters predicting 3.2% growth. That would be remarkable and, were it not for the pervasiveness of Brexit negotiations, it would move the Pound.

 

US diary bursting at the seams

Inflation data from around the world showed evidence of a slowdown yesterday as demand ebbs and discounting is on the rise. The US Federal Reserve, like many other central banks, is mulling further interest rate cuts to try to avert deflation and slowing demand. They have reason to be concerned; US retail sales showed the first decline in seven months in September; raising concerns that the softness in the manufacturing sector is starting to permeate the consumer sector. We have a plethora of US data to mull this afternoon, including housing, employment, manufacturing, industrial production and crude oil inventories. Throw in a few Federal Reserve speakers and there is enough to get some volatility happening in the USD.

 

Mixed Australian economic data

Overnight last night we got an improvement to 5.2% in Australia’s unemployment rate but a drop into negative territory on the NAB business confidence index. Reserve Bank of Australia Deputy Governor Guy Debelle voiced his concern yesterday that construction sector activity is likely to further decline and have a greater than expected impact on the broader economy. We will get a speech from the RBA governor tonight, so that’ll be keenly watched for signs of concern and hints of even lower interest rates.

 

Ambitious requests

And here’s a talking point. In a letter to an Australian Newspaper, one reader says, in a visit to a local supermarket, I was disgusted to find the spaces nearest the door were reserved for ‘parent and child’ parking. She goes on to suggest that, if you are fit enough to have children you could ‘jolly well’ walk to your car. She suggests the spaces nearest the store should be reserved for the people with the most expensive cars who will probably spend the most and therefore have the most shopping to carry back to the car. Having lit the blue touch-paper, I would suggest she stands back. On a similar note, I am encouraged to see that the supermarkets near me have massively underestimated how healthy we all are because their acres of disabled spaces are never full up.