- Sterling slips on Carney’s comments
- Chinese exports slump
- NZD hit by dairy price fall
In his evidence to a House of Commons committee, Bank of England Governor Mark Carney warned of the risks of Britain leaving the EU, much to the chagrin of those who wish it to happen. He speculated that banks may move to Europe and that the UK economy would take a hit in the immediate aftermath of an exit. He did make a politically savvy move in praising David Cameron's 'deal' and hinted at the risks of staying in the EU but the Pound still slipped a little on the news. There is a chance Sterling will slide a little further on this morning's industrial and manufacturing production data, so be careful out there.
Overnight we heard that the massive dairy cooperative in New Zealand, Fonterra announced a reduction in prices paid to farmers. It is estimated that it will wipe NZ$400 million off New Zealand's GDP and that isn't good news. The NZD weakened on the news against the Pound and against the Australian Dollar as well.
For its part, the Australian Dollar benefited from a rise in business confidence. In spite of poor Chinese Data, (China is Australia's number one export market these days) the Aussie Dollar held on to recent strength.
That news from China was a 25.4% fall in Chinese exports over the last year. That is pretty dramatic and a huge surprise for some commentators because many believe Chinese authorities would normally manipulate the drama out of that data but it was not so. A lack of global demand is damaging Chinese data, as it is for the EU, the UK and pretty much everywhere else.
There is a lot of confidence amongst analysts that the European Central Bank will push the overnight deposit rate further into negative territory tomorrow. Charging banks even more to deposit funds overnight is supposed to entice them to lend those funds to people and businesses that will pay them interest but fear is keeping that flow at bay. The Euro is holding up well and may even strengthen further as the ECB is seen to be doing something to try to stimulate growth but in my opinion, growth is really only going to come from demand and that is in short supply at the moment.
This afternoon brings the interest rate decisions from the Bank of Canada. The decision will be to leave the base rate on hold at 0.5% and traders will say OK before going back to watching the Euro and USD.
And finally, I do a lot of browsing the internet for odd, strange and interesting stories for this report. I have noticed, and you may have noticed too, that the Daily Express is obsessed with UFO and alien stories. They have a weird news page on their website which is fixated on such stories. It seems the Daily Mail has cornered the market in Kardashians and the Express is focussing on Martians. Not a lot of choice there.
A guy is pulled over by an Alabama state trooper. The cop walks up to the driver's side window and says, "You must be some kind of tearing hurry boy. You were doing 80 on that highway. What have you got to say for yourself?"
"I am really sorry," says the young man. "I am late for a party and I didn't want to disappoint the kids."
"That sounds like some kind of dumb excuse to me boy," says the trooper.
"No really," says the guy. He points to the back seat where a dozen knives are laid out. The trooper steps back, pulls out his gun and aims it at the driver.
"Get outta the car and put your hands on the hood!" shouts the trooper.
The driver starts to follow instructions but says, "There's nothing to worry about. I'm a juggler. They aren't dangerous knives...honest. Give me a chance and I'll show you."
Unconvinced, the trooper stands back, allows the man to get some knives out of the back seat and watches as he starts juggling five knives very expertly.
At that moment a driver is passing on the other side of the road and sees the scene. He calls his friend who is drinking in the bar down the road. "Billy-Bob, whatever you do, don't drive back home down route 41. You ain't never gonna pass the sobriety tests them cops are doing on that highway."
Major Economic Releases
FX Research by David Johnson
||UK: Manufacturing production m/m
||CAD: Overnight rate
||US: Cruide oil inventories
||NZ: Official cash rate
Daily Currency Analysis with Zeta Webber