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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: Knighty Tin who wrote (11863)	9/16/2004 9:35:20 AM
From: mishedlo	Read Replies (2) of 116555

Sterling rises as UK retail sales rebound LONDON (AFX) - Sterling enjoyed a good session, buoyed by unexpectedly robust retail sales data for August which helped build the case for at least one more UK rate hike this year. Official figures released earlier showed sales on the high street rose 0.6 pct in August from July for a 6.5 pct annual increase, way above expectations for a month-on-month decline of 0.2 pct and a more moderate rise of 5.8 pct from a year earlier The figures indicated a revival in consumer spending and went against the grain of recent survey data which had suggested a slowdown. "As it stands, today's data pour cold water on any notion that interest rates have already peaked in the UK," said Neil Mellor at Bank of New York The data prompted a healthy rise in sterling with the currency subsequently gaining around 0.5 pct against the euro and dollar Analysts widely belive the Bank of England will put up interest rates by another quarter point in November to take the benchmark repo rate to 5.00 pct. Since November last year, the central bank has already raised rates five times from 3.50 pct Deutsche Bank economists said today's figures prove the market cannot rely on survey evidence to predict the official measure of retail sales with any certainty Elsewhere, there was little change, with attention already falling on US data this afternoon Investors will be looking to US CPI data for signs whether inflationary pressures have eased, particularly after Friday's disappointing producer prices figures. The weak PPI numbers had prompted many in the market to doubt there will be a need for aggressive interest rate hikes in the US Additionally, the US Philadelphia Fed survey released later today will need to show a strong reading to back up yesterday's strong Empire survey and confirm that a positive trend in the US economy is indeed developing US weekly jobless figures will also be released this afternoon, followed by key data on US capital inflows for July Yesterday, the dollar posted strong gains after the Empire State index -- a measurement of manufacturing activity in the New York region -- came in above expectations, but if today's data turns out to be negative the US currency could be on the backfoot. fxstreet.com

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