Tuesday was a bit of a lively one as central bankers spoke and data disappointed. The Confederation of British Industry reported a sizeable reduction in confidence amongst retailers as their index dropped from 17 in December to just 8 in January. That kind of matched the relatively negative mood towards the UK that we are witnessing across the markets. However, whilst that might have held the Pound back a little, Sterling was already very weak and the strength in the Pound that we witnessed through the day was quite encouraging. That happened in spite of comments from members of the Bank of England who opened a debate about whether UK interest rates could go into negative territory in the future. Clearly the Pound is so oversold that it is hard to find anyone who wants to sell more. As long as this morning’s 2nd revision of Q4 economic growth data doesn’t produce a greater decline than 0.3%, the Pound has a good chance of making further gains.
Yesterday’s other central banker story was a testimony by Federal Reserve Chairman, Ben Bernanke to the Senate Committee on Banking, Housing, and Urban Affairs; a committee that desperately needs a snappier title. His testimony was best characterised by this sentence, ‘Current Economic Conditions Since I last reported to this Committee in mid-2012, economic activity in the United States has continued to expand at a moderate if somewhat uneven pace.’ The whole statement is interspersed with moderate and gradual type phrases but Mr Bernanke reaffirmed the Fed’s commitment to QE programs and the result was very little change in the US Dollar. Today’s US event of note is the release of the January durable goods orders data and that is forecast to be very poor so the US Dollar might end the day on the back foot.
The Euro is relatively strong in spite of being blighted by the uncertainty from the Italian elections. This morning’s data includes both industrial and consumer confidence indices for the Eurozone and both are forecast to be flat or worse so, unless a miraculous resolution can be found to the Italian election impasse we ought to see a little euro weakness.
The Australian Dollar has strengthened a little overnight after Reserve Bank of Australia member Roger Corbett rejected any notion of further interest rate cuts because he fears it would damage the Aussie economy and inflate house prices. The Aussie Dollar was also buoyed by confirmation that Australia’s AAA credit rating is secure according to S&P.
That’s about it for Wednesday but Thursday’s data diary is as large as a very large thing with an elephant on its shoulders. So we will expect more excitement in currencies tomorrow. Can you believe that will be the last day of February!
Away from the markets, if kids want a blessing gunman style, they need to get themselves to Ojo de Agua church in Saltillo, Mexico. Father Humberto Alvarez dons a robe decorated with Superman, Spiderman and Batman and douses the congregation in holy water fired from a super-soaker. It’s a kind of fast food blessing thing he has going on but he has upset the Bishop. Mind you, it would be a brave bishop who took on ‘Super-Blessing-Man’ wouldn’t it.
80 year old Henry was very unhappy one Sunday morning because he had lost his favourite hat. Instead of buying a new one, he decided he would go to church, sit right at the back but leave a little early and steal one from the rack in the entrance porch when the worshippers were busy praying.
When Henry arrived at the church an usher spotted his walking stick and helped him to to a pew near the front where he felt compelled to sit and listen to the entire sermon on 'The Ten Commandments.'
After the service, Henry met the vicar in the vestibule, shook his hand vigorously, and told him, 'I want to thank you for saving my soul today. I came to church to steal a hat and after hearing your sermon on the 10 Commandments, I decided against it.'
The vicar answered, 'You mean 'Thou shall not steal' changed your mind?'
'No,' said Henry, 'the one about coveting my neighbour’s wife. As soon as you said that, I remembered where I had left my old hat.'