UK lending data should disappoint

Today's Highlights

Lack of data leaves analysts navel-gazing

UK lending data should disappoint

FX Market Overview

Europe's reaction to Russia over the Ukraine situation is akin to telling a bully you will give him your dinner money tomorrow but you are going to bring less in. Hah! That taught you, you big bully! Apparently money speaks loudly and the tears of anguished relatives of murdered air passengers fall to the ground unnoticed.

Monday was largely devoid of meaningful data and that left room for traders and analysts to speculate on upcoming events. The topics for debate are many and varied but whether the European central Bank is doing enough to stimulate growth is one. No is the answer but with holes in the global economic recovery, it is hard to find growth.

Another topic is whether the reserve Bank of Australia might buck the trend and actually cut interest rates again. The Reserve Bank of Australia is well aware of the influx of investor money and the strengthening effect that is having on the Aussie Dollar so perhaps reducing that yield advantage is the key to making Australia's exports more affordable. Perhaps that would help to answer the fears over weak domestic performance. It would be very interesting to see how that played out at a time when other central banks are shuffling their behinds in readiness for rate hikes; reducing the cheap money that is fuelling the Aussie strength.

And, speaking of which, the big talking point is when and how the US Federal Reserve will start raising interest rates. It is pretty clear they plan to stop buying bonds on a monthly basis before the end of this year; perhaps even as soon as October. If that is so, then the door will be open for rate hikes as early as Q1 2015. The US Dollar has strengthened a little and is as strong as it has been against the embattled Euro since October 2013. This week's barrage of data and speeches will cause some fluctuations in the value of the USD' none more so than the Fed's interest rate and bond buying announcements tomorrow. This afternoon's US consumer confidence index has the potential to shake things up but, with the impending Fed decisions so close, the effect is likely to be muted.

Sterling is facing a morning of mortgage and credit data. The mortgage lending data is almost certainly going to disappoint; tighter lending rules and fewer affordable houses will see to that. Sterling is trading fairly flat ahead of that data and will continue to do so unless the figures are remarkably different from the forecasts.

Aside from the markets, I still have the beaming smile of Erraid Davies stuck in my mind. Nervous delight has never been so utterly charming. 13 year old Erraid became the youngest ever Commonwealth Games competitor and medallist when she won bronze in the SB9 100m breaststroke final. Being a true Scot, Erraid's plans for celebration were; in the words of her mother, "...some cake and some Irn Bru." And quite right too.

Quote

St Peter and Satan were arguing about who would win a Football match between Heaven and Hell. They agreed that they would both field their best 11 and play a match on neutral ground.

St Peter warned Satan, "You do realise we've got all the best players and the best coaches up here don't you?"

"Yes," said Satan, "...but where do you think the referees and FIFA staff are?"