- GBP volatile after strong manufacturing data
- Euro holding up in spite of Greek concerns
- Aussie interest rates on hold as trade surplus booms
By David Johnson
The Reserve Bank of Australia (RBA) left the Australian interest rates on hold at 1.5% when they met overnight. In an upbeat message the RBA saw global economic expansion, but were cautious about the slightly overheated domestic housing market. I suspect Aussie base rates will stay on hold for quite some time. Australia’s trade surplus grew much more than expected to AUD 3.57 billion in February. That is almost double most forecasts and higher valued commodity exports were seen as the main reason. More sustainable growth in Australia’s number one export market, China is a key element. The Aussie Dollar was volatile but is largely unchanged from yesterday’s close against most other currencies.
Across the Tasman Sea, NZ business confidence slipped last month. A net 16% of businesses expect conditions to improve in the months ahead and that is a sharp drop from the 26% reported in the previous 3 month period. So, whilst the net figure is still in the positive, it is less optimistic than previously and that has weakened the NZ Dollar a little. The GBP-NZD rate still hasn’t broken the NZ$1.80 barrier though.
Sterling slipped back from the spike we saw in early trade on Monday in spite of manufacturing data that was four times more positive than forecasters predicted. The lack of data later in the day allowed for profit taking and the lack of UK data today could bring more of the same. However, the service sector Purchasing Managers’ Index (PMI) is due tomorrow and we think that should be supportive of the Pound. GBP buyers may seize the opportunity to take advantage during this dip.
The Euro is holding up well in spite of continued concerns over Greece. The funds owed by Greece to the EU have grown by €10 billion in the last two years and now amount to 6% of Greek Gross Domestic Product (GDP). That’s unsustainable and the Greek Finance Minister is expected to travel to Brussels today to discuss their plight. Positive manufacturing data from the Eurozone failed to lift the shared currency yesterday.
The US Dollar is bouncing around as the ISM Manufacturing Index showed its 94th consecutive month of growth but was down to the slowest pace of growth in six months. The data was largely in line with expectations but served to remind us that unrelenting good news is not yet the picture in America. The Dollar weakened and then strengthened but may weaken again today because factory orders and durable goods orders (data due for release this afternoon) are likely to be poorer than the previous data.
And this is a momentous day in history. On 4th April in 1581, Sir Francis Drake completed a circumnavigation of the World, in 1918, the Battle of the Somme came to an end, in 1949 NATO came into being and in 1928, Maya Angelou was born. Maya was responsible for one of my favourite quotes, “I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.”
“My boyfriend cheated on me, so I convinced him to get matching tattoos. He went first and I went home.”