Sterling steady ahead of big data day [Video]

Today's Highlights

• Sterling steady ahead of big data day

• Australian business confidence rebounds

• Catalan independence declaration imminent

Current Market Overview

Monday went off without much drama. The US markets were closed and the data diary was about as exciting as beige paint on a beige thing.

Things heated up overnight with a very solid showing from Australia’s business confidence index. That was up on the week and saw the previous week’s negative data revised upward. The Aussie Dollar didn’t gain a lot, but that was probably more to do with recent comments from one Reserve Bank of Australia (RBA) member who talked of interest rate cuts as a possibility. We get the Aussie consumer confidence index tonight and that is forecast to be positive as well. So AUD strength is likely if that proves to be accurate.

In the Northern Hemisphere, there is a chance the Catalan Parliament will declare independence from Spain later today.  The President of the Generalitat of Catalonia, Carles Puigdemont says that declaration will be “gradually effective”. That sounds Brexit-like doesn’t it. The Euro is pretty stable in spite of this news and there really isn’t a lot of data to focus on today, so the Catalan story will dominate the Euro market.

There is plenty for Sterling traders to watch today. Industrial and manufacturing data is forecast strong, the trade deficit is expected to have contracted slightly, construction output is expected to have stood still but that would be better than the 0.4% contraction we saw last month but the NIESR Gross Domestic Product (GDP) estimate may be less encouraging. Sterling is sitting just below €1.12 and around US$ 1.31. These are lower than a few weeks ago but this is by no means a collapse in the Pound. Good news could still lift Sterling, so if you are a GBP buyer, you may wish to protect yourself before this morning’s data.

This afternoon brings Canadian housing market data. The Canadian Dollar is treading water but has the potential to strengthen if this data is upbeat.

There isn’t much from the US today other than the Minneapolis Federal Reserve (Fed) president speaking. However, we have an embarrassment of news tomorrow when several Fed chairs will be speaking and the minutes from the last Federal Reserve Open Market Committee meeting will be published. All everyone wants to know is ‘when will the monetary tightening start again’. Answer that and we will all be happy ladies and gentlemen of the Fed. If that is a sooner rather than later date, the USD will strengthen and vice versa.

And the law of unintended consequences has a victim. Austria has banned the wearing of full veil burkas but the chap wearing a shark suit outside a store called McShark was a tad taken aback when police officers told him he had to take off the shark head. He protested, saying he was ‘just doing his job’ and was promptly arrested for flouting the law. I wonder how that is going to work for surgeons and asbestos removers; oh and bee keepers and motorcyclists and fencing coaches….