Today's Highlights

  • No change expected from Federal Reserve this week

  • Sterling stands ground aginst Antipodean Dollars

  • Euro could weaken on speeches

 

Current Market Overview

Central bankers dominate the news in the week ahead. The US Federal Reserve and the Bank of England both have decisions to make in their respective interest rates this week, but we will also have speeches from European Central Bank (ECB) members, including Mr Draghi himself, and meeting minutes from the Reserve Bank of Australia. All are influential of course and any or all could be market moving. The ECB's Mr Draghi is the only central banker in the spotlight today and we will be interested in his views on whether the ECB should be expanding its Quantitative Easing programme again as the Eurozone economy has stalled; suffering from a drop in German activity.

USD starts week stronger

The US Dollar starts the week rather stronger than it has been. That has nothing to do with this week's US interest rate decision from the Federal Reserve and is contrary to the rise in oil prices following the oil tankers being bombed in the gulf. It is even strong ahead of what we expect will be a poor result from the Empire State Manufacturing Sentiment Index. So what does that tell us? Well it hints very heavily that investors are buying the US Dollar as a safe haven hedge against the US versus China trade impasse and the nervousness over the accusations levelled at Iran regarding the limpet mines used in the tanker bombings. In spite of the wishes of every beauty queen on the planet, world peace seems just as far as away as ever it was.  Either way, no one is expecting a rate cut or hike from the Fed this week but their mood is a market mover too.

European speeches could weaken Euro

As mentioned above, the President of the European Central Bank is speaking today and twice tomorrow. He's a bit like London busses in that regard, you wait for a comment for ages and then three come at once. There are growing calls for the ECB to boost the money supply and, with interest rates at zero percent, their other option is to print money and buy bonds or other assets. It is worrying that 12 years after the credit crunch, interest rates have still not stabilised and economies are still struggling. The Euro is susceptible to weakness if further money supply is mooted.

Sterling standing its ground against Antipodean Dollars

The Reserve Bank of Australia is publishing the minutes from their last meeting overnight (UK time) and the fact that they may well have to cut their base rate again, makes this an interesting read.  Whilst the Pound is weakening against the USD and Euro, it is holding up against the Aussie and Kiwi Dollars for precisely this reason; both economies are struggling in specific areas.

Sterling faces an interest rate decision this week. Almost unquestionably, that decision by the Bank of England will be 'no change' but the statement and press conference will be worth a view, in light of the Brexit delay and the slowing UK data.

It's Electrifying!

And at a time when we are all being urged to use less power, less gas, less fuel and less electricity, no one has told the Health and Safety Executive (HSE). They have instructed a London furniture maker that he must use an industrial vacuum cleaner rather than a broom in future. He has been sweeping his workshop with a good old-fashioned broom for 40 years or more and satisfactorily cleaned the workshop with nothing more than elbow grease. Surely, the dust and shavings he collects with his broom were created in the processing of the wood in the first place. Are they going to ban the lathe, saws and sanders too?

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