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Daily brief -Thursday 13 April 2017

By Daily Market Brief - Thu 13th Apr 2017

Winding down

Weak dollar policy

Donald Trump has been at it again. His comments about interest rates and exchange rates persuaded investors to remove the US dollar, at least temporarily, from their to-buy lists.  It was the weakest among the major currencies, losing four fifths of a cent to sterling.

Mr Trump demonstrated again his willingness to reverse policy at the drop of a hat. A year ago he warned that for the Federal Reserve to raise rates "would be a disaster" for the economy. In September he castigated the Fed for keeping rates "artificially low". Yesterday he told the Wall Street Journal "I do like a low interest rate policy". 

On its own the volte-face might have been greeted with a shrug of the shoulders but when Mr Trump also told the WSJ "I think our dollar is getting too strong" investors had to sit up and take notice. Oh well, in that case best to sell it then. The dollar dropped half a cent. Although it is not the gift of the president to set the value of his currency investors were bound to infer that he would try to weaken it. For the moment, anyway. 

Real earnings flat

Investors did not think much of the UK employment data but neither could they be bothered to do anything about them. The pound was unchanged on the day against the euro, the Swiss franc, the Japanese yen, the Canadian and NZ dollar and the Norwegian krone. 

An 25,500 increase in the number of jobseekers came as a surprise: the number was supposed to have gone down slightly. It was offset, though, by an uptick in average earnings, which were 2.3% higher on the year. That put wages and consumer prices exactly in sync, a fractionally better outcome than the one investors had been geared up for.

The Canadian dollar popped higher when the Bank of Canada kept its benchmark interest rate unchanged at 0.5% but retraced its advance when governor Stephen Poloz held his press conference. One Canadian economist described him as having a "cup half empty view of the economy".

Housekeeping

Many financial markets will close this evening for a four-day weekend. With one eye on the clock and the other on their boss most investors will not be inclined to get into anything this morning that they cannot easily get out of this afternoon. It could mean a quiet day.

Thursday's most important ecostats - the Australian jobs data - are already out. A strong increase in full-time employment was worth nearly a cent to the Aussie, making it the top performer among the major currencies.

The United States does not do Easter holidays. As if to prove it, two important sets of US data come out tomorrow: retail sales and consumer prices. On Monday morning China will report on retail sales, industrial production and first quarter economic growth. Limited liquidity could mean exaggerated moves if any of those numbers are out of kilter.

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