Sterling the weakest and the Kiwi the strongest yesterday – 15th December 2015
Sterling was yesterday’s weakest performer falling by an average of 0.7%; the equivalent to one Japanese Yen, one Euro and a quarter of a US cent. The reason – the Bank of England Deputy Governor Minouche Shafik who delivered a speech at the Institute of Directors entitled “Treading carefully”. Her general drift was that interest rates must remain low until wage growth accelerates and that eventual increases should be “gradual and limited”. It wasn’t ground-breaking stuff but it coincided with a fall in UK house asking prices (Rightmove) and renewed worries about Britain’s future in the EU.
Another swing of the risk/safety pendulum saw the commodity-oriented currencies reversing some of Friday’s losses. The NZ Dollar was the top performer, strengthening by 1.6% as New Zealand’s latest economic and fiscal forecasts were relatively upbeat. It was enough to take the Kiwi into the lead for the day, the week and the month. South Africa’s Rand continued its recovery following the reappointment of a proper finance minister.
Mario Draghi, the president of the European Central Bank, did his bit for the Euro when he said in a speech that he expects inflation to reach its 2% target “without undue delay” and that, if it doesn’t, “there are no restrictions to our choice of which tools we use or how”.
As if to make up for Monday’s dearth of data, today’s calendar is bursting with data. The two sets of data that will matter most are the inflation numbers from the UK and the US. Although analysts believe UK consumer prices fell by -0.1% in November they are still expecting the headline inflation rate to pick up from -0.1% to 0.1%, taking the “core” rate – excluding fuel and food prices – up to 1.2%. The equivalent figures for the States are pencilled in at 0.5% and 2.0%.
Other data today includes German and Eurozone investor sentiment, Euroland employment, Canadian manufacturing shipments and US house-building activity. Oh, and the two-day FOMC meeting begins.