Bank of England keeps on hold and UK retail sales slow

Today's Highlights

• Bank of England keeps on hold and UK retail sales slow

• Australian employment strong

• New Zealand Gross Domestic Product growth picks up

 

Current Market Overview

As from today, we get more light than dark each day now that spring has sprung and I guess we are all hoping that heralds a similar transformation in our understanding of the Brexit process; more clarity and less opaqueness. UK Prime Minister Theresa May is quite right in saying that we have all had enough of the politics and now want a conclusion. Let’s hope we can get that in the next eight days.

Sterling slips a little on uncertainty

Maybe the markets are not convinced that is going to happen, because Sterling has dropped two cents against the Euro and a little less against the US Dollar. We are expecting no change from the Bank of England today on their 0.75% base rate, but maybe some slowdown in retail sales, especially at the core level. Sterling may slip a little further if that is true, but no one should be surprised if people are holding on to their hard-earned cash in such uncertain times.

Australian jobs growth slower

Australian employment growth slowed a little in February – just 4,600 fresh jobs were created – but that brought the unemployment rate down to ac4.9%. In an economy that is so geographically spread, getting the right skills in the right locations is always challenging, so this is pretty much full employment. That would normally promote wage growth and that is inflationary. Hence, the Australian Dollar strengthened a cent on the news and the Reserve Bank of Australia has another factor pressing for an interest rate hike rather than any cuts.

NZD stronger

In nearby New Zealand, economic growth picked up in Q4; posting 0.6% growth against just 0.3% in Q3. That puts interest rate cuts on the back burner for the Reserve Bank of New Zealand and the Kiwi Dollar strengthened, as you might expect.

And, sticking with central banks, the US Federal Reserve kept its base rate on hold last night and suggested there would be no rate hikes this year. That weakened the US Dollar a tad but, even though this delay is due to slowing growth, the delay in rate hikes will ultimately be good for the US Economy. We are in an odd position where the US yields are well above those in Europe, Japan, the UK and even Australasia. As if people needed another reason to hold US Dollars.

Spooky

And you know how those antique ‘experts’ on daytime TV talk about old furniture as having character and spirit? Well, a thrift shop in Salisbury, North Carolina, recently sold a set of hand carved furniture with a different kind of spirit. The lot came with a warning about the previous owners reporting the furniture was haunted. It sold for $1,000. Clearly someone wasn’t concerned about having ghosts in their drawers.

Spring has sprung – sort of…

Can February March?
No, but April May

When is trampolining season?
Springtime, naturally!

There are monkeys falling from the sky!
Must be Ape-ril showers