Monday wasn’t overflowing with economic data but it was a busy day in the markets. The fallout from Friday’s impressive US employment report was still playing out. Tuesday started with Australian home loans beating market forecasts; a sign that may help the Reserve Bank of Australia to delay their interest rate cut. However, lending for investment in properties dived by 8.5% last month, so that is not so positive. Nevertheless, the Australian Dollar reacted by strengthening by ¾ of a cent against the Pound.
For its part, Sterling has slipped a little overnight but remains on the high side of €1.40 as I write. The Euro had weakened after it became obvious the European Central Bank plans to move their deposit rate into negative territory in December. The theory is that if banks have to pay the ECB to hold deposited funds, the banks will find something better to do with the money, like...well I don’t know.... lend it to industry maybe...and y’know people and stuff. You know the sort of thing that banks are expected to do. We will see how that pans out but the euro is going to suffer if they follow through with that move because investors will most likely send more of their money overseas if banks aren’t paying interest on deposited funds.
And Sterling is stable against the US Dollar and others ahead of tomorrow’s UK unemployment data. The only serious news item for the Pound today is the inflation report hearing at the treasury committee. It’s a bit of a red herring because we get all the BOE news as it happens these days but the MPs need to have their say and do a bit of grandstanding as they ask why the BOE is missing its inflation target and Mark Carney talks about depressed energy and commodity prices.
The big overnight news was the fact that Chinese consumer inflation slipped again. The 1.3% annualised rate is well below both the previous month and the forecasts. There are obvious repercussions for Asian countries that supply China and we may see further moves by the People's Bank of China to force a bit of spending back into the system.
Overnight tonight we get the Reserve Bank of New Zealand’s inflation report.There is a very strong chance the RBNZ will cut their base rate ; maybe as soon as December, so this report is very interesting in that regard. A bit of serious scrutiny will be taking place when that is published at 20.00 GMT. There is scope for the NZ Dollar to weaken overnight if the message is delivered loud and clear that a rate cut is coming.
And it is all kicking off in the curling championships in Kazakhstan. Huge controversy reigns after a new style of broom was developed that has a rough abrasive covering which allows the sweepers to guide the stone. It is claimed the new broom takes away any need to be accurate. But the World Curling Association has sprung into action and banned the eil broom for this tournament. Phew. I am glad I could bring this important news to you because I knew you would be worried.
Letter to God
A man worked in a post office processing all mail that had illegible addresses. One day a letter came to his desk, addressed in a shaky handwriting to God.
He thought, 'I better open this one and see what it's all about.' So he opened it and it read:
'Dear God, I am an 83 year old widow living on a very small pension. Yesterday someone stole my purse. It had a hundred pounds in it which was all the money I had until my next pension cheque.
'Next Sunday is Easter, and I had invited two of my friends over for dinner. Without that money, I have nothing to buy food with.
'I have no family to turn to, and you are my only hope. Can you please help me?'
The postal worker was touched, and went around showing the letter to all the others. Each of them dug into his wallet and came up with a few pounds.
By the time he made the rounds, he had collected £96, which they put into an envelope and sent over to her. The rest of the day, all the workers felt a warm glow thinking of the nice thing they had done.
Easter came and went, and a few days later came another letter from the old lady to God. All the workers gathered around while the letter was opened. It read:
'Dear God, How can I ever thank you enough for what you did for me?
'Because of your generosity, I was able to fix a lovely dinner for my friends. We had a very nice day, and I told my friends of your wonderful gift.
'By the way, there was £4 missing but I guess that was those thieving scumbags at the post office.'