- AUD stronger after RBA leaves rates on hold
- Aussie trade gap widens
- Service sectors in the spotlight
Monday was a quiet data day but US factory orders were the lowlight. I say that because the level of orders has fallen in three of the last four months and that really isn't what Fed Char Janet Yellen will want to hear. A 1.7% drop in February compared to a year earlier is not a recipe for growth in the US economy but the stronger US Dollar and a slump in mining and petrochemical industries is bound to take its toll on production demand. This afternoon brings retail sales data and a service sector confidence index and the forecasts are mixed. Perhaps the US Dollar is due a correction. Tomorrow brings the minutes from the last Fed meeting, so we will all be interested to see just how far into the future the Fed is pushing their expectation of further interest rate hikes. I think we will need a telescope to see the day.
The Reserve Bank of Australia left their base rate on hold at 2.0% for the 10th
straight month when they met early this morning (UK time). However, they warned that the strengthening Australian Dollar would damage any hopes of transitioning the economy away from reliance on raw materials. They are right to be concerned because we also had the Aussie trade balance figures this morning and the deficit leapt to A$3.4 billion. That marks a record run of 5 months of deficits above A$3 billion. That's not a statistic the RBA will want to read. Nonetheless, the fact that the markets are pretty convinced we won't see further interest rate cuts from the RBA meant the Australian Dollar had room to strengthen and it did. Great news if you need to sell AUD but not so hot if you are importing from or migrating to Australia.
The rest of the day is given over to purchasing managers indices covering the service sectors of Spain, France, Sweden, Germany, Italy, the Eurozone as a whole. We will also get the UK version which will be influential on the value of the Pound as the day progresses. The service sector makes up something like 70% of the UK economy.
And it's a miracle. Paseka Motsoeneng, a pastor in South Africa says he visited Heaven during Easter and he can prove it because...wait for it....he took a selfie while he was there. And you can own a copy of that selfie if you just give him ZAR 5,000. What a bargain. For just over £225, you too could own a selfie made in heaven. Don't scoff. He's a pastor; it must be true.
A young guy was driving by a farm in the West Country when a calf ran out from a field and the driver couldn't avoid it. The calf died immediately. The driver went to the farm at the end of the lane and found the owner of the herd. He explained what had happened and apologised profusely. He then asked what the animal was worth. "Oh, about £200 today," said the farmer. As the driver took out his wallet, the farmer got a glint in his eye and said, "but in six years it would have been worth £1,500 because he is from a prize winning bull and an award winning cow. So £1,500 is what I'm out of pocket just for the bullock himself.” The driver got out his chequebook and the farmer quickly continued, “ let alone the fees I could have charged for his services in the future. A bull like that could service hundreds of cows a year." Realising he was being fleeced, the driver smiled wryly and said, "Well, he could be impotent for all I know but I will cover your costs for the animal itself." He finished taking out his cheque book and wrote a cheque and handed it to the farmer. "Here," he said, "is the check for £1,500.” With that, the driver headed off to find somewhere to get his car repaired. That afternoon the farmer went to the bank to deposit the cheque. "Sorry Sir," said the cashier. "This cheque can't be banked."
"I knew he was no good," says the farmer. “that young man was just wasting my time and now I am out of pocket again.”
"No," said the cashier, "the cheque is fine but it's dated 5th