- Sterling unmoved by government borrowing data
- EU business confidence slides again
- Bank of Canada interest rates likely on hold
The chances of an interest rate cut in Australia grew early this morning when Australian consumer inflation was announced as just 1.3% on the year to March; down from 1.5% in Q4 and 1.8% in Q3. The Reserve Bank of Australia will heard a lot of calls to cut rates and stabilise the economy. There are few reasons not to. The Australian Dollar is weaker, as you might expect. Good news for AUD buyers and therefore for those buying Australian exports; a partial counterbalance in itself.
In the EU, we have seen a drop in French and German business expectations surveys this morning. The Euro has slipped against the already strong US Dollar but is largely unchanged against the Pound. Most analysts would have expected that kind of result, so the rumour drove the market rather than the actual data. Mind you, a report from the Recruitment and Employment Confederation has confirmed that businesses are concerned about that B word thing but are also planning fresh recruitment. As they say in The United States of Trumpland, go figure.
Sterling traders were hoping it would get a boost from yet another strong government debt report this morning. They reported a large surplus last month because that was the tax year end and all then last minute tax receipts arrived. The April and May data is usually positive as well. The actual date was a ted worse than expected but Sterling probably won’t react too much because there is another matter hanging over the markets. I won’t mention it but it starts with a B and the uncertainty it emits pervades the markets like a stiff cold breeze on a February morning.
This afternoon brings the Bank of Canada’s interest rate decision plus the statement and press conference. We are not expecting any change in the 1.75% base rate but the statement is always worth a listen to try to assess the direction of travel on monetary policy. A bit of Canadian Dollar volatility is likely.
US data is light today, so traders will be hoping for news about the US v China or US v EU trade standoffs. The rest of the week will throw us US GDP data which is likely to show quite a sharp drop in their economic growth rate and a swathe of other data releases.
And Reuters are reporting that Kenyan police are investigating after their own rifles were stolen but the circumstances are even more embarrassing. It seems that a number of officers had left their post to watch football in the nearby shopping mall when thieves broke into their abandoned post and walked away with their weapons and ammunition. Woops-a-daisy.