Christmas shopping in New York? Sounds like a nice idea. It may not be as expensive as you think, given the current exchange rate. Despite the high oil price, flight bargains mean that the pound goes a long, long way in the Big Apple.

The only downside is the necessity to declare goods to Customs and Excise for any additional duty. For the benefit of footballers' wives or fiances, guidelines as to duty free limits are clearly displayed in airport terminals.

The big question at the moment is where is the US dollar exchange rate going? Most people are aware that the US has a huge trade deficit. Now that the election is out of the way, with the exception of matters in the Gulf region, it is high time the economy was attended to.

Under a second Bush administration, the US Treasury is unlikely to stand in the way of a weaker dollar. It suits, plain and simple. If only the dollar were to depreciate against the minor currencies of those countries like China, then there wouldn't really be a problem. China's trade with the US is growing, and with the renminbi pegged to the dollar, there has been no exchange rate adjustment to date.

A weaker US dollar raises global purchasing power for dollar-related goods and services. US net trade should improve as US exports remain cheap. With imports relatively more expensive, the US consumer's tradition of foregoing foreign goods is likely to remain in force.

This all bodes well for the US economy and, as a consequence, the US stock market. Although looking overbought in comparison to the UK market, it is important for our market to maintain momentum that the US market continues to push ahead.

The FTSE 100 Index, in the meantime, looks determined to hold on to increasing two-year market highs, as results continue to surprise on the upside. Last week saw upbeat figures from BA, BG, BT and BSkyB.

Tomorrow sees the much awaited half-year results from supermarket group J Sainsbury. The family shareholders recently denied that they were trying to find a buyer for the company.

Former Asda bosses Allan Leighton and Archie Norman are rumoured to be looking at making a bid. The figures will show why the company is so vulnerable. With underlying sales down by 1.1 per cent during the first half, profits will be in the range of £125m to £135m. In order to save some cash for reinvigorating the store group, new CEO Justin King has warned that the full-year dividend will be halved to 7.8p.

At the other end of the high street is GUS, the owner of Homebase and Argos as well as the credit checking agency Experian, which will be publishing its half-year numbers on Thursday. It has already boasted that Argos enjoyed underlying sales growth of seven per cent in the first half, while Homebase delivered growth of four per cent. Expect profits to be ahead by nearly 15 per cent. The caveat - as with all retailers - is that the Christmas period is critical and that there may be signs of a slowdown in consumer spending across the board.

Today sees Britain's largest telecoms group, Vodafone, announce interim results, having launched its 3G product last Wednesday. Earnings are likely to be up on the £5.4bn last year.

-*For investment advice contact Anthony Platts on 01642 608855.

Published: 16/11/2004