Look ahead 5/12/23: UK retail sales; China Caixin; RBA; JOLTS; Ashtead

(Partial Video Transcript)

Will ECB beat Fed in rate cut?

Hello, I'm Angeline Ong. Welcome to your look ahead to Tuesday, 5 December 2023. Now, the UK comes front and centre quite early on with the Retail Sales Monitor. This is the one from the British Retail Consortium (BRC). Expectations for November, 2.7% month-on-month.

Just showing you the sterling chart here, because this is quite a key one to look up. I'm going to show you the pound versus the dollar first, because it really is all to do with easing interest rate differentials between developed banks.

Currently, it's the Federal Reserve (Fed) that is expected to cut rates quite soon. However, the European Central Bank (ECB) might beat them to it. Also, everyone's now looking at the Bank of England (BoE) to see what the Bank of England governor, Andrew Bailey, has up his sleeve.

Sterling plummets against strong dollar

However, I can tell you in terms of sterling, the pound has been falling against the broadly stronger dollar. Traders wanting to see what the Bank of England might signal at its next policy meeting.

And ahead of that, Andrew Bailey, the BoE governor, has reiterated that the bank is still committed to do whatever it takes to get inflation down to its 2% target, and has also reminded the public that not yet enough progress has been made on that front.

Now, further on in the session, we will also look out for numbers out of China, because they've got the Caixin Services purchasing managers’ index (PMI). This might, in fact, come ahead of the European session.

Will RBA maintain interest-rate status quo?

And a little later on, we could see interest-rate action out of Australia as well. The Reserve Bank of Australia (RBA) expected to keep rates unchanged at 4.35%. Rates are not expected to happen until the fourth quarter next year, due to the very strong Australian housing market.

Just bringing up the charts of the US dollar versus the Australian dollar for you. This is a currency cross that we have been watching for some time, because our clients trade this quite a lot.

There's an extreme amount of volatility in this space, especially with this interest rate easing differential I was talking about earlier on: ahead of the Fed and also ahead of the RBA decision, the Aussie and the Kiwi dollar hitting fresh four-month highs.

And last but not least, on the economic front, we've got the ISM Services PMI out of the US. Look out for jolts ahead of the all-important Friday jobs number, and also API crude oil inventories. And a little further along, we've got numbers out from Ashtead, Ferguson and also Mean Pig Group, famous for its bespoke greeting cards.

Ashtead has UK and US exposure

Ashtead, I just want to focus on that one for you, because it has quite a huge exposure, not just to the UK, but also to the US. Ashtead in November said annual group and US rental revenue growth would come in at around 11% to 13%. This is the annual forecast. That, however, disappointed because it was below its prior forecast of 13% to 16%.

Now, for more market news, we'll be back on beat the street at 130pm London time to give you a heads-up to the US trading day. And IG's Angela Barnes will be doing the same at 7.30am for the European trading session. Follow me on Twitter @AngelineOng. This is IGTV.