- Sterling holds up in spite of ECB President’s comments
- US GDP to set tone for US interest rates
- Zuma survives ‘No Confidence’ vote
Data from the regions of Germany showed a small increase in consumer inflation this morning. That hasn’t moved the Euro and it is unlikely that the consumer confidence data due for release at 10.00am will have much impact either. The head of the ECB has added to the Brexit posturing in speculating that Britain would fare worse from a hard Brexit than the EU would. It might be worth Mr Draghi spending more time worrying about the Eurozone economy because there is growing speculation that a NO vote in this Sunday’s Italian constitutional referendum could spark a banking crisis in Italy. Upwards of €40 billion might be needed to steady the ship if that is the case. That story is certainly weighing on the value of the Euro right now.
Meanwhile, UK data continues to defy the naysayers. This morning’s mortgage approvals figures should show an improvement on last month’s 62,900 loans. The forecasts are for a number between 65,000 and 67,000. That hardly smacks of an economy on the brink of disaster and Sterling is holding up well.
We are hearing this morning that it looks as though Jacob Zuma, South Africa’s beleaguered president, has survived a vote of no confidence, but he remains under pressure to resign. Nonetheless, the removal of some of the uncertainty has strengthened the Rand to a degree. We start the UK trading session with the GBP-ZAR rate in the R17.30 area.
This afternoon brings the Second Estimate of US GDP growth for Q3 and the 3.0% forecasts would certainly suggest that the Federal Reserve could start moving the US base rate higher. Their meeting is on 14th December, so, barring anything unforeseen, the US Dollar should stay strong for the next fortnight.
The twitterati are all agog at the comments made by Bollywood star and Big Brother winner, Shilpa Sheety. In describing the need for children to read and be taught about literature, she said, “I think having books like Lord of the Rings and Harry Potter as part of the syllabus is a great move because it cultivates imagination and creativity at a young age. I think books like Little Women would also encourage respect towards women at a young age. Even Animal Farm should be included as it will teach the little ones to love and care for animals.” Now can anyone spot the minor, teeny weenie misunderstanding here?
A factory installed a new machine that did the work of 15 people. They placed raw materials on a conveyor belt at one end and beautiful equipment came out of the other. All was well for a week and then one morning, the machine just refused to fire up.
At one stage, 10 people were climbing all over it reading manuals and trying to determine what had gone wrong. In the end, the manager asked someone to call the service engineer. 50 minutes later, a chap in a boiler suit with a large tool box arrived. He flipped a few switches, clicked some relays and then took out a small screwdriver. He climbed under the machine and opened a tiny inspection hatch. Inside was a small screw and the engineer turned the screw a quarter turn anti-clockwise before shutting the hatch, clambering out from beneath the monstrous machine and flicking the ‘On’ switch. It burst into life immediately and started to do its pre-production checks. In a few minutes, all was well and the factory was back in business.
The engineer turned to the manager and said, “As you didn’t take out our maintenance plan, I am going to have to bill you for this directly.”
“I understand,” said the manager. “What’s the damage?”
The engineer said “That’ll be £22,000 please.”
“What?” said the manager. “You have only been here 10 minutes. All you did was turn one screw. How do you justify that bill?”
At that point, the engineer got out an A4 folio, opened it and wrote some details down on the page. He ripped the page off and handed it to the manager. It read,
“For turning one screw a quarter turn to the left, £1.50. For knowing which screw to turn and by how much, £21,998.50.”
Today's Major Economic Releases
||UK: Net Lending to Individuals
||UK: Mortgage Approvals
||Canada: Currenct Account
||US: Preliminary Gross Domestic Product (GDP)
||US: Preliminary GDP Price Index
||US: Federal Open Market Committee Member Dudley speaks
||US: Conference Board Consumer Confidence
||Reserve Bank of New Zealand Financial Stability Report
Daily Currency Analysis by David Johnson
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