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September 2016

BOE has no more tools

Published: Friday 23 September 2016

  • BOE has no more tools
  • Bank bailouts imminent in Germany and Italy
  • EU and Canadian data dominate
Central banks were in action again yesterday. Where do I start? The South African Reserve Bank is as good a place as any. They left their base rate on hold at a nose bleed inducing 7.0%. The Rand was largely unmoved by the news. 

The European Central Bank’s German bankers are all focussed on Deutsche Bank which may even have to have a government bailout to see them through their woes. Little is being said by the German Government but I suspect a lot is being negotiated behind the scenes. This at a time when Italian bank Monte dei Paschi is on the verge of a government bailout. A decade of financial intervention hasn’t fixed all the problems yet.  Those sub-prime loans have got a lot to answer for. 

And the Governor of the Bank of England might as well have put his hands up in a sign of surrender when he said he had run out of ways to stimulate the UK economy. Mark Carney called upon the British government to take decisive spending decisions to reignite the UK economy which is still too lacklustre nearly 10 years after the credit crunch that made the world economy look decidedly pear shaped. Sterling didn’t really react to his comments in any significant way but I suspect we all knew that what he was saying was true. Central Banks have very blunt tools at their disposal and they can’t create growth purely through their own actions. So it’s over to you Mrs May. 

Today’s data diary is split into European and Canadian data. This morning brings Purchasing Managers Indices from the Eurozone, all of which are expected to be a tad better than the August readings. 

This afternoon brings Canadian retail sales and consumer inflation data. The forecasts for these are also encouraging. So I suspect we will see some strength in the Euro and Canadian Dollar through the morning. 

And there are a lot of people who are scared of spiders but one woman in Portland, Oregon took her fear to the next level when a Spider dropped down from the rear view mirror in her car. So panicked was the driver that she veered off the road and the car ended up on its side in a ditch. The woman was largely unharmed but no mention is made of the fate of the spider. Probably out stalking other drivers I guess. 


Kirsty is walking through the supermarket when she sees the chap with whom she’d had a passionate one-night stand the night before.

He was busy arranging boxed of washing powder into a stack at the end of an aisle.

“Oooh you lying scumbag,” she shouts. “You’re not at all exciting and exotic are you. You’re no action man. You told me you were with the Red Arrows.”

“No,” he says as he turns around, “I was perfectly honest with you. I told you I am part of the Ariel display team.” 

Today's Major Economic Releases 

Market BST Data/Event Previous Expected
EUR 09:00 EU: Flash manufacturing PMI 51.7 51.5
EUR 09:00 EU: Flash services PMI 52.8 52.8
CAD 13:30 Canada: Core CPI m/m 0.0% 0.2%
CAD 13:30 Canada: Core retail sales m/m -0.8% 0.5%
CAD 13:30 Canada: CPI m/m -0.2% 0.1%
CAD 13:30 Canada: Retail sales m/m -0.1% 0.2%
USD 14:45 US: Flash manufacturing PMI 52.0 52.1

Daily Currency Analysis by David Johnson

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