Sterling levels off after trade data

Today's Highlights

• Sterling levels off after trade data

• Disappointing Aussie retail sales data

Current Market Overview

President Obama, in a farewell speech, has warned against closed-mindedness, inequity and racism in US politics. I wonder who he was referring to? Maybe we should ask the woman who Donald Trump calls, ‘the most overrated actress in Hollywood’? I think Meryl Streep may have some answers. Since her denunciation of the president elect, Russia has banned Meryl Streep movies. Mind you, that story was in the New Yorker, so it might be satirical... And then there’s the story about Trump in the Moscow Ritz Carlton and those hookers...but it’s too early in the morning for stuff like that!

Less controversially, Sterling has recovered a little composure overnight after hitting its lowest levels in ten weeks yesterday. The prospects of an absolute break with Europe, as outlined in the Prime Minister’s interview over the weekend, is a concern to many, but the PM sees nothing but opportunity ahead; or so it seems. Sterling will have been helped by the Halifax House Price Index, which jumped to its highest level since March. A month on month rise of 1.7% is enough to lift the gloom a little.

We heard overnight that Australian retail sales missed the forecasts in November. Clearly, the December data is the crucial pre-Christmas period, but the disappointing November numbers stopped the Australian Dollar from capitalising on yesterday’s more upbeat figures. The Sterling – Australian Dollar rate is back to levels last seen in November.

Across the Tasman Sea, New Zealand house prices fell 2.1% in December, as increased supply started to hamper rises. A similar effect was seen in December 2015 and it wasn’t until March 2016 that things began to pick up again. Perhaps we will see the same in 2017, but oversupply may continue to be an issue. The NZ Dollar has strengthened against Sterling to levels last seen last November, as the Pound suffers. 

This morning, Sterling has continued to hold its ground after an improvement in the UK’s trade deficit with the rest of the world. The falling Pound makes imports less attractive, but gives UK exporters a price advantage. This narrowing of the trade gap is kind of inevitable, but a welcome relief, nonetheless.

The rest of today’s data diary is…well….meh.

I’ll leave you with the story that Mario Draghi, the ECB President, has had his Bank of Italy email account hacked by two members of an investment firm. No money was taken (or so they say) but the hackers were after information to help their investments. They even hacked the email account of the Vatican. I can’t help thinking that would have been an interesting read.