Good morning
US retail sales were mixed yesterday with a lower than expected headline partly offset by a revision higher to the previous months data. Initial jobless claims were a touch higher than expected. The US dollar had been pushing higher into the numbers but this was reversed as the afternoon went on, with GBPUSD trading up to 1.2245 into the London close, some 70 points off its lows, while EURUSD was up around 1.0300, 60 points higher than the lowest point of the day. GBPEUR was a little higher on the day, reaching 1.1880.
The last thing I wrote in yesterdays musings was i feared UK retail sales due out this morning could be bad. And boy was I right. Downward revision to the previous month as well as a large miss in December sent GBP lower, GBPUSD from 1.2220 to 1.2160 and GBPEUR from 1.1870 to 1.1830. Both off those lows as I type, now 1.2190 and 1.1840, but this is another worrying piece of UK data following softer inflation and GDP earlier in the week.
USDJPY traded below 155.00 briefly overnight as markets continue to believe a rate rise from BoJ next week is highly possible. Now off those lows at 155.65, GBPJPY is 189.80 having been dragged down below 190.00 by the weak UK data this morning. Meanwhile China data overnight surprised to the upside, AUD seems to have been given a boost by the data with GBPAUD down to 1.9620 and AUDNZD back up to around 1.1100.
It is Trump’s inauguration on Monday. There has been a lot of talk of tariff increases on day one of his Presidency although concerns of immediate 100% tariffs have recently been replaced with talk of graduated tariffs. I don’t know how this is going to go but suffice to say that Trump is perfectly capable of upsetting an already wobbly apple cart. Never a dull moment with him, that’s for sure.
Trump is still looking at taking Greenland under his wing, I also see he is getting involved in the UK’s return of the Chagos Islands back to Mauritius. He will no doubt be looking to protect the important military UK and US base on Chagos, but this seems a clear case of the US getting involved in the sovereignty of other countries.
In football, Spurs slip to 14th in the league as Man Utd come from behind to win 3-1 against Southampton. Plenty of premier league action over the weekend, the highlight could be Arsenal v Aston Villa tomorrow although Brentford at home to Liverpool could well be a decent match. Spurs will be desperate for points against Everton on Sunday, defeat for Spurs could make life difficult for big Ange.
That’s all from me for now, some second tier US data this afternoon but nothing on the agenda that would normally suggest major volatility. Save that for Trump next week perhaps.
Have a great weekend as and when it comes
- 10.00 EU HICP
- 10.00 ECBs Nagel speaks
- 11.00 ECBs Cipollone speaks
- 13.30 US housing starts building permits
- 14.15 US industrial production
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