You always know in a movie when something dramatic is due to take place. The music changes or there is a deep monotone drone in the background as the prelude. This week has felt like that every day. The UK election takes place tomorrow amidst violent attacks by mad brainwashed radicals and confused pollsters. The next 48 hours will deliver volatility no matter what the outcome is.
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Setting the election aside (no that’s not a policy announcement) there is other news. The Australian economy grew 0.3% in the three months to March; down from the 1.1% it grew in the previous quarter. That’s an annualised rate of 1.7% and that too is down from 2.4% in Q4. The Aussie Dollar took this in its stride and strengthened on news that the rest of the Arab world is putting pressure on Qatar over their terrorist links. That will stifle Qatari exports and, as Australia is a competitor, the Aussie economy will benefit. That reduction in output from Qatar will also put upward pressure on energy prices and that too benefits Australia and other energy product exporters.
Higher energy costs tend also to weaken the USD. These markets are traded in USD and the rule of thumb is that the higher the commodity price, the weaker the currency can be. The lack of US data today will probably allow the GBP-USD rate to hover around the 1.27 to 1.30 range - but don’t expect it to stay there through tomorrow and Friday.
There is zilch, zippo, nada market moving data today but that drone continues in the background ahead of tomorrow’s UK election and the European Central Bank (ECB) interest rate announcement. No Change is expected from the ECB, by the way.
And being shared widely online is a picture of a New Zealand Police Officer instructing a man to get down on the ground. Nothing odd about that other than the fact that the cop is pointing at the man with a hand shaped like a gun. One finger out like a barrel and the thumb up like a cocked hammer. When you pull back, you see other officers with their guns raised, so the cop in question is just instructing him what will happen if he doesn’t comply but the image is a good one when cropped.
Thought for the day
The difference between Capitalism and Socialism?
Capitalism is the exploitation of man by man
Socialism is the exact opposite.