Little effect on exchange rates – 30th January 2017
Little effect on exchange rates – 30th January 2017
Teresa May’s visits to the US and Turkey and the President Trump’s travel ban on Muslim countries have had very little effect on exchange rates. In the Far East this morning the first reaction to Mr Trump’s travel ban was to favour the safe-haven Yen, Euro and Swiss Franc and to shy away from supposedly risky currencies however, that hasn’t been maintained. Compared with Friday morning Sterling is just about unchanged against the US Dollar and the other dozen most actively-traded currencies.
At the back of the field were the Canadian Dollar and the South African Rand who both lost 0.3%. The problem for the Rand was a story on Friday that President Zuma intends to sack ministers who want to see him replaced.
Last Thursday provisional figures for fourth quarter growth indicated a 0.6% expansion of Britain’s gross domestic product in the fourth quarter of 2016 which trumped the US GDP data the following day which put growth at 0.5%. The UK number 0.1% above forecast and the US number 0.1% below. Reactions to the data were muted; analysts saw America’s shortfall as a technical effect of above-normal performance in the fourth quarter of 2015 and investors were reluctant to become too excited about Britain’s Q4 reading being unchanged from Q3. The US GDP figures coincided with the monthly change in durable goods orders, which also fell short of forecast with a -0.4% decline. Any disappointment there was offset by the Michigan consumer sentiment index which came out shortly afterwards: it was up by half a point at 98.5.
New year celebrations took China out of the reckoning for the weekend and they will continue for the whole week. There will be monetary policy decisions from Japan, Britain and the United States and Friday brings the ever-popular US employment report.
No change is expected from the Bank of Japan tomorrow or from the Bank of England on Thursday. Analysts expect the Federal Reserve to remain on hold this Wednesday too, but there has to be an outside chance of a rate increase, given that the Fed has been talking up the prospect of two or three of them this year.
Today’s ecostats began with a much-reduced NZ deficit and a fall in Japanese retail sales. Spain reported provisional growth of 0.7% in Q4. German inflation and US income and spending came later, along with US pending home sales.