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Federal speakers unruffled despite market volatility

Published: Thursday 08 February 2018

  • Reserve Bank of New Zealand rate on hold
  • Federal speakers downplay US rate hike prospects
  • Chinese imports surge
By David Johnson
The US Dollar stepped back a little before the close of play yesterday after several Federal Reserve speakers were surprisingly dovish in their tone. Chicago Federal Reserve President, Charles Evans even said he saw no need for a rate hike in 2018. He’s a non-voting member at the moment but, his views are interesting and John Williams, head of the San Francisco Federal was a tad less hawkish than usual when he said the Federal Reserve would not overreact to good news.  We will get at least two more comments from Federal members this afternoon, so stand by for action.
We heard overnight that China’s trade surplus more than halved last month as imports shot up by 30.2% while exports only grew by 6.0%. The import data is so incongruent with recent numbers and with the forecasts that a revision is highly likely next month. The currencies of the countries that supply China all gained overnight. 
The Reserve Bank of New Zealand left their base rate on hold at 1.75% last night and seem pretty committed to keeping it there for quite some time. The Quarter Four inflation data certainly didn’t give any reason for a rate hike and New Zealand exporters will be very grateful indeed if the lower interest rates can stay for a while because it keeps the NZD weak and helps their overseas sales efforts.
The Bank of England will no doubt follow suit at noon today, but, as always, the voting pattern and the tone of the statement that accompanies the decision will be the keys to the Pound’s direction later on.
And George Soros, as well as funding the very sinister group, Antifa, has also pumped £400,000 into a fund seeking to reverse the Brexit vote. Soros, you may remember, sold Sterling bonds so heavily that it eventually forced the UK government to take the Pound out of the Exchange Rate Mechanism in 1992. Soros reportedly made $1 billion that day. I wonder where his profit comes from if he stops Brexit because I seriously doubt he has a solely idealistic agenda. 
  • A man walks into a chemist's and says, 'Can I have a bar of soap, please?' The chemist says, 'Do you want it scented?' And the man says, 'No, I'll take it with me now.' Ronnie Barker
  • It's amazing that the amount of news that happens in the world every day always just exactly fits the newspaper. Jerry Seinfeld
  • Here's a picture of me with REM. That's me in the corner. Milton Jones
  • During the festive season, we must not forget those who are less fortunate than ourselves. The poor, for example. They may attempt to burgle your house while you are at church. Harry Enfield (as Mr Cholmondley- Warner)

Today's Major Economic Releases

Market BST Data/Event Previous Expected
GBP 12:00 Bank of England Official Bank Rate 0.50% 0.50%
GBP 12:00 Bank of England Official Bank Rate Votes 0-0-9 0-0-9
GBP 12:00 Bank of England Inflation Report    
GBP 12:00 Bank of England Monetary Policy Summary    
GBP 12:00 Bank of England Asset Purchase Facility 435b 435b
GBP 12:00 Bank of England Asset Purchase Facility Votes 0-0-9 0-0-9
CAD 13:30 Canada: New Housing Price Index 0.1% 0.1%
USD 13:30 US: Unemployment Claims 230k 232k

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