- New PM in UK lets Sterling bounce
- Canadian interest rates probably on hold
Britain will have a new Prime Minister today. After PMQs David Cameron will ask the queen to sack him and Theresa May, the 2nd
female PM will take his place in Number Ten. Mrs May has already started making plans for a Brexit department within the Civil service and will get a chance to build her cabinet (nothing to do with IKEA I'm told) later today. Sterling traders clearly like the clarity that brings because the Pound has gained on all fronts over the last 48 hours.
That may correct as we near the Bank of England's meeting tomorrow. Many are forecasting a rate cut from the BOE in order to act pre-emptively ahead of further Brexit damage to the UK economy. However, if this GBP strength is maintained, Mark Carney's Monetary Policy Committee may well hold off from anything rash or hasty looking and are likely to talk the economy up rather than scare twitchy traders with a rate cut.
There isn't a lot of movement elsewhere other than a shimmy in Asian markets around the Chinese trade data but few seem concerned over the sabre rattling with regards to the ruling over islands in the South China Sea. Yet again China is ignoring international rules and is barrelling on unhindered. I suppose other governments don't want to sanction the country that delivers all their cheap stuff.
We have seen a little weakness in the Australian Dollar after poor consumer confidence data and in response to concerns about the global impact of the UK's decision to leave the EU. The rest of the day brings Eurozone industrial production data, which, if the German data is a guide, will be poor. That will help Euro buyers.
The Bank of Canada will decide on interest rates today but no one is expecting a change right now. The ongoing impacts of the Federal Reserve's rate hike delays, Brexit and a levelling off in commodity prices are all undecipherable at this stage.
This evening brings the release of the US Beige Book; a regional insight into the US economy. This forms part of the agenda for the next Fed meeting, so it does influence rate decisions. That will be read with interest but may not move the solid US Dollar too much.
Have a great Wednesday everyone.
Thank you for this Philip
While walking down the street one day a Member of Parliament is tragically hit by a truck and dies. His soul arrives in heaven and is met by St. Peter at the entrance.
'Welcome to heaven,' says St. Peter. 'Before you settle in, it seems there is a problem. We seldom see a high official around these parts, you see, so we're not sure what to do with you. I'd like to let you in but I have orders from higher up. What we'll do is have you spend one day in hell and one in heaven. Then you can choose where to spend eternity.'
'Really, I've made up my mind. I want to be in heaven,' says the MP.
'I'm sorry, but we have our rules.'
And with that, St. Peter escorts him to the elevator and he went down, down, down to hell. The doors open and he found himself in the middle of a green golf course. In the distance is a clubhouse and standing in front of it are all his friends and other politicians who had worked
with him. Everyone is very happy and dressed in evening dress. They run to greet him, shake his hand, and reminisce about the good times they had while getting rich at the expense of the people. They played a friendly game of golf and then dined on lobster, caviar and champagne.
Also present is the devil, who really is a very friendly & nice guy who has a good time dancing and telling jokes. They are having such a good time that before he realizes it, it's time to go.
Everyone gives him a hearty farewell and wave whilst the elevator rises until the door opens in heaven where St. Peter is waiting for him.
'Now it's time to visit heaven.'
So, 24 hours pass with the MP joining a group of contented souls moving from cloud to cloud, playing the harp and singing. They have a good time and, before he realizes it, the 24 hours have gone by and St Peter returns.
'Well, then, you've spent a day in hell and another in heaven. Now choose your eternity.'
The MP reflects for a minute, then he answers: 'Well, I would never have said it before, I mean heaven has been delightful, but I think I would be better off in hell.'
So St. Peter escorts him to the elevator and he goes down, down, down to hell.
When the doors open he's in the middle of a barren land covered with waste and garbage. He sees all his friends, dressed in rags, picking up the trash and putting it in black bags as more trash falls from above.
The devil comes over to him and puts his arm around his shoulder. 'I don't understand,' stammers the MP.' Yesterday I was here and there was a golf course and clubhouse, and we ate lobster and caviar, drank champagne, danced and had a great time. Now there's just a wasteland full of garbage and my friends look miserable. What happened? '
The devil looks at him, smiles and says, "Yesterday we were campaigning. And today you voted".
Today's Major Economic Releases
||EU: Industrial production m/m
||US: Import prices m/m
||BoC monetary policy report
||BoC rate statement
||BoC overnight rate
||US: Federal budget balance
FX Research by David Johnson
Daily Currency Analysis with Charlie Horsley
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