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Another week another round of rumours.
This week sees the publication of the US NFP (labour/employment) numbers. Most commentators are pointing to a US rate hike in September (economic data dependent). While China is still showing signs of weakness (PMI numbers disappointed again) the FED has indicated they are more concerned about US data rather than global data…really? That’s a change of heart!! I have said that the US must only raise rates if they think the US data is sustainable and continuous (and global economic conditions) rather than one good months followed by a disappointing month followed by a good one etc etc. Additionally with US elections looming and both candidates being rubbished in the news the FED must tread carefully. I am still in the dark as to Trump’s foreign and domestic policy and Clinton has her issues too regarding the email saga (which can only be described as clutching at straws).
I wonder with Brexit now a month in, it will be interesting to see how the data starts to come out. The UK’s GDP numbers were pre Brexit so now we have to wait and see what the numbers look like for July and how the negativity surrounding Brexit is hitting manufactures and retailers alike and consumers spending their cash.
FX rates continue to trade sideways for the most part. GBPUSD ranging 1.30-1.33 while EURGBP 0.8350-0.8450 and EURUSD 1.0950-1.1250. Until we get a definitive confirmation on Friday that US labour market is indeed growing and sustainable one cannot help but think currencies will trade within the range. Stocks are thinking the number will be good given the recent rally, then again things can change at the drop of a hat. We saw this only too clearly in June. So let’s all be a little careful not to get too excited just yet.
As an interesting note, I am currently in Spain on vacation. Speaking to local agents, they have told me (and I have seen) the Spanish economy is well on the road to recovery and King Felipe VI has nominated Mariano Rajoy of the PP to form a government. This is seen as pretty positive. Property prices in Spain (Costa Del Sol) are up over 20% over the past year and with the drop in the GBP UK citizens looking to purchase in Spain are being hit hard. Nevertheless agents are telling me this has not stopped UK buyers entering the Spanish market with a view to moving to Spain. With holiday hotspots the victims of terror attacks families are coming to Spain in their hundreds of thousands further boosting the economy. In fact our favourite Pizzeria in Elviria is now heaving from 7.30pm…which I have never seen before. No doubt the recent terror attacks in the mid east, France and Turkey have had a severe effect on the local economies.
Have a good day
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