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World Fist Update

Deal or No Deal: Deal

The major news overnight is that a deal has been provisionally agreed between the UK and Europe. Yes, there was marginal support for Sterling with a bid on GBP/AUD to the top side of 1.80, which we have now retracted off, but not the move one might have expected, well, to me the reasoning to this is clear. The problem is not with Europe and the United Kingdom, but more with the United Kingdom and itself. To put simply, this is a step in a direction but when you have a thousand steps to climb, one step does not seem like an achievement.

As one would expect, the rumbles from Westminster have begun (I would suggest you watch the House Speaker, John Bercow’s best bits on YouTube to get an idea what I am talking about). First to the block to criticise May’s win was of course, the former Foreign Secretary, Boris Johnson, coincidently one of the key players in the leave campaign, who has vowed to vote against the bill and rally support to this effect. The next couple of days will no doubt be volatile for anyone who is long sterling in my mind. The case remains that politics continues to dominate Sterling, and with politics continuing to dominate we can be sure to expect some heavy swings over the coming months, if not weeks.

A look to the day ahead – Aussie Labour data.

It’s been an interesting month again for the Australian economy, and more interesting for the RBA. I must admit, I was a little surprised with last week’s relatively Hawkish tone from the RBA given recent data but the case does not stand in the short to medium term outlook to hike interest rates just yet. The likely probability as it stands for a hike looks closer to the dark side of 2019 into 2020 at minimum.

One release the RBA can certainly not hide behind is the labour force. The Central Bank made positive reference in last month’s statement to the continued uptick in employment and continued downward trajectory of the unemployment rate. Today’s reading may put those comments under the spotlight. Unemployment is expected to tick up to 5.1% from previous 5%. Not overly concerning but something the RBA will most definitely be keeping an eye on. Employment change is expected to show a strong 20+K reading from the previous month’s soft 6K reading. Australia aside, this evening the UK release their Retail Sales figure, expected to come back in black with a positive 0.1% growth for the month. Finally, Stateside, Retail Sales figures are released later on this evening, expecting to show a positive uptick of 0.5% growth for the month (Core figure, stripping out automobiles). Have a good day.

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