Janet Yellen will meet President Trump today to interview for keeping her job as Chair of the Federal Reserve. Given Trump’s driving force in all matters is to undo policies, appointments and executive orders that were made by President Obama, Ivanka Trump probably has a better chance of taking over the stewardship of US monetary policy than Ms Yellen. We expect a decision one way or the other in the coming days.
The Beige Book of regional economic performance yesterday noted that economic activity grew at a measured pace across the US in September and October, despite sector-wide disruptions caused by recent hurricanes.
Madrid take another step toward suspending Catalan autonomy
Through Article 155 of the Spanish constitution, Madrid can suspend the autonomous status of Catalonia, despite the region voting for independence in an unofficial referendum. While threats to declare unilateral independence have been made, it appears Madrid will move first and withdraw all authority of Catalan parliament this weekend. How this situation eventually resolves is still unclear, but the euro’s taken the news in its stride and sits close to the week’s high against the dollar.
Markets don’t like the new Kiwi government
The Labour Party, out of power for 9 years and led by a 37 year old, will form a government in New Zealand having formed a coalition with the Green party and the nationalist NZ First party overnight. The kiwi dollar has reacted badly to this and flown lower by over 2 per cent. How much further the currency falls will depend on the new government’s policies on central bank independence and immigration affected growth.
Headwinds for the UK consumer dent sales figures
Another troubling dataset from the UK today as retail sales figures showed consumers were hitting the high street at the slowest rate for four years. It is not a surprise that the retail picture is weak although a 4 year nadir obviously raises uncomfortable questions about just where UK growth is going to emerge from in Q4. Consumption is the engine of the UK economy and the retail sector, hammered by a weak pound, tighter margins and customers beset by real wage declines are in the eye of the storm at the moment. GBP/USD touched the week’s low following the figures, but has recouped much of the losses ahead of the US trading day.