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Biden ruffles China's feathers

Good morning

UK retail sales disappointed earlier this morning which sent GBPUSD down from 1.3800 to 1.3785, not a huge move which suggests they were nowhere near bad enough to take rate rise thinking for next month off the agenda. GBP has moved a little lower against the EUR as well, EURGBP at 0.8440 (1.1850). BoEs chief economist warns that inflation is likely to reach 5% next year but still believes it will fall in the second half of 2022. EURUSD is 1.1640, a touch higher than its been overnight, some interest in a recent Reuters poll that suggests analysts see no ECB rate rise until 2024 although despite this most participants thought the risk was a rise could come sooner than expected, rather than get pushed further into the future. Feds Powell speaks later today, will be interesting to hear whether he talks about inflation risks.

Asian stocks were just in positive territory overnight, the news that Evergrande met an $80m+ interest payment calmed nerves. This was a payment that had been due on 23rd Sept, but was given a grace period for a month. A suggestion by the Chinese govt that their clampdown on big tech firms is coming to an end also offered some comfort to the markets.

The Telegraph reports that Merkel urged Macron and other EU leaders to drop threats to Poland over worries another exit could really damage the EU. In better news it is reported that UK PM Johnson may accept a limited role for ECJ in NI protocol discussions which could open the door for a deal to be agreed. Meanwhile Russia has said it could deliver 10% more gas to Europe if NordStream 2 pipeline is approved. I’m not sure why the older supply routes are suddenly unable to supply the gas we need. Something political going on here as I have mentioned before.

More worrying perhaps than even energy prices is Bidens commitment to defend Taiwan. Despite the might of the US military, it is not going to win a battle with China over the island, were it to come to that. The White House later appeared to back down on the rather strong comments, saying their policy on Taiwan was unchanged. Regardless, Bidens words are certain to have upset China.

Just a word of warning to those of you who use petrol-engined garden equipment. You may remember I had some problems with my lawnmower a few weeks ago. It all seems to be fine now, but has led me to pay more attention to the fragility of its engine. Anyway, I asked the firm that supplied and service it whether the new E10 petrol is OK to use in it. The answer was quite a resounding ‘No’.

While car engines are bigger and less fragile, the higher ethanol levels in E10 can cause multiple problems for small petrol engines. They recommend only using E5 super unleaded for garden equipment. They say to avoid supermarket fuels, and are very eager to point out that petrol deteriorates after just a few weeks of standing around so advise to keep supplies as fresh as possible. There are some additives you can use as well, particularly for winter months when equipment is likely to be standing around and they do sell a product for £4/litre, so considerably more expensive than even E5, not sure I’ll go that extreme. I’m sure there are plenty of people who operate petrol machinery without problems for years, but we have been warned.

Into the weekend and once again the highlight of the sporting calendar will be the top of the table clash between my young Harefield team and local rivals Chalfont. Both teams are unbeaten in the league so far this season, and although it’s a bit early to talk of such things, its already looking as though one of us will be at the top come the ned of the season. A tough match, that’s for sure.

Have a great weekend

- 09.00 EU markit manufacturing, services PMIs

- 09.30 UK markit manufacturing, services PMIs

- 13.30 CAD retail sales

- 14.45 US markit manufacturing, services PMIs

- 15.00 Feds Daly speaks

- 16.00 Feds Powell speaks

- 20.30 CFTC position data

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