• US-China negotiations harm US Dollar and Japanese Yen
  • Australian Dollar weaker on potential interest rate cuts

It is rare for a prospective Prime Minister to openly tell business leaders they will be worse

off if he is elected but that is what Boris Johnson did yesterday at the Confederation of British Industry (CBI) Annual Conference. His withdrawal of a prospective corporation tax cut and the use of those funds for NHS projects was a surprise to those present. Interestingly, his approval rating rose on the announcement and the Conservative Party’s lead grew through the day. As that happened, Sterling also gained ground You may also find interesting:

AUD weaker as Reserve Bank of Australia hints at lower rates
 
The Australian Dollar is a tad weaker this morning after the minutes to the last central bank meeting showed a potential for lower rates. The Reserve Bank of Australia (RBA) committee discussed rate cuts but decided to hold off for now. The GBPAUD exchange rate is testing just above A$1.90 at the interbank level.
 
Interesting fact about German banks
 
It is interesting to see that 60% of German banks are working on negative interest rates for business depositors. i.e. you deposit your company’s funds into an account and pay the bank to look after it. The same is true of many private client accounts. That must be hammering liquid savings and I suspect it is shoring up EU equities markets. If the European Central Bank (ECB) finally gets around to raising their base rate, you have to wonder how hard the share indices will be hit. There is a dearth of EU data this morning, so not much will change with the Euro.
 
US-China negotiations harm USD and JPY
 
Lack of progress on the US-China trade negotiations has hit the US Dollar and the Yuan. The Sterling-US Dollar rate moved into the mid $1.29s. Any further bad news will see it testing $1.30. This afternoon’s US data includes building permits and housing starts as well as, what we expect will be, poor manufacturing sales data, plus a speech from Federal Reserve member John C. Williams. He is quite dovish, so will be watched closely.
 
Unusual weather
 
And if you think the UK weather has been odd, pay your respects to the Alaskan city of Anchorage. On Saturday, they experienced both the highest one day snowfall since 1968 (8.3 inches) and the highest temperature since 1967 at 45 Fahrenheit (7.2 degrees Celsius). Almost balmy. Shovelling snow in a T-shirt and shorts must be a strange experience.

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