UK public borrowing is today's highlight

Today's Highlights

RBA keeping rates on hold for extended period

Chinese economy stronger than forecast

UK public borrowing is today's highlight

FX Market Overview

The story of the paralysed man who can walk after breakthrough spinal surgery is both amazing and challenging at the same time. I am sure that everyone in a wheelchair wants to know whether it might work for them and when it might be available but apparently the technique in which part of his olfactory nervous system were used to repair his spine, is likely to be only suitable for very few conditions. These sorts of news stories are amazing for those involved but, for some it must be like showing a kid a jar of sweets but saying he can't have them for 20 years.

Monday lacked data but the overnight releases made up for that. From their meeting minutes it is clear that The Reserve Bank of Australia still thinks the Australian Dollar is overvalued and they are convinced an extended period of interest rate stability is on the cards and necessary. They certainly scotched any idea of rate cuts because the housing market is still overheated. The cited a 14.3% rise in Sydney house prices over the last year so it is a fair argument. It would appear that, if the employment figures had been more stable and robust, interest rates would be on the rise in Australia but the RBA won't say that for fear of further strengthening the Aussie Dollar. It is no surprise that the Sterling - Australian Dollar exchange rate looks like a leaf in the wind this morning. Seems fair anyway because that's how the rest of us look.

The other overnight news is that the Chinese economy is slowing. It grew by 7.3% in the year to Q3. That's down from the 7.5% in Q2 but it is still a shade better than most analysts had expected. Hence the Australian and New Zealand Dollars were largely unmoved by the news. As China is such an important export market for the Australasian economies, their currencies tend to react negatively to any slowdown in China.

Today's only significant data is this morning's release of the UK government's public sector borrowing data. Those who know a lot more about that than I do, expect the size of government debt to have fallen to around £9.5 billion and that would be welcome after last month's £10.9 billion figure. Sterling has sort of strengthened in the last few days but doesn't look robust enough to break out of its current trading ranges just yet. Maybe tomorrow's MPC meeting minutes will help but we will need to see some improvement in the GDP data on Friday to get a serious boost.

Away from the markets, the Chinese authorities have been in the news for other reasons. Chinese state media is warning people to be careful if they want to choose an English name for their baby. They warn that names such as Satan or Dumbledore are not permissible. Women are warned to think carefully about "food" names such as Candy, Lolly or Sugar, which might be seen as "stripper names" (apologies to anyone out there who has one of those names. This is the view of the Chinese government not me). There's also a very specific warning about names with unfortunate connotations, especially when used in conjunction with family names like Dong or Wang. I am not a great fan of state intervention but sometimes guidance is necessary.

Quote

'A few decades ago we had Johnny Cash, Bob Hope and Steve Jobs. Now we have no Cash, no Hope and no Jobs. Please don't let Kevin Bacon die.'
Bill Murray