BOE is more cautious

Today's Highlights

BOE is more cautious

Spike in US inflation

RBNZ may be on hold for a year

FX Market Overview

The awful events in Ottawa shook the generally peaceful and tolerant Canada and extend the menace of twisted fundamentalism to yet another country. It is hard to understand how it is possible to hate someone enough to want to slaughter them randomly because they don't adhere to your particular set of beliefs. Our hearts go out to those affected in Canada and in Syria and in Libya etc etc etc. As Winston Churchill once said, 'A fanatic is one who can't change his mind and won't change the subject.'

So, in other news, yesterday's release of the Bank of England meeting minutes revealed a Monetary Policy Committee which is slightly more worried about the fragility of the recovery than previously. The two dissenters still voted for an interest rate hike but they were outvoted by the 7 members who see troubled waters ahead. There appears to be relative confidence in the UK economy but concerns over external influences. This morning's UK retail sales data will be closely watched to see if the BOE's nervousness is well founded. The warm weather is likely to have postponed winter wardrobe spending, so we can expect a slight dip in high street activity. Sterling is on the weaker side of current ranges.

US inflation data offered an unexpected upward step in September. That surprised everyone and afforded the US Dollar a bit of strength whilst US equity markets slipped. The big debate is whether and when the Federal Reserve will feel confident enough to start raising interest rates. That is highly unlikely to commence before Q2 of 2015 and maybe much later so the US Dollar will remain in a volatile holding pattern until we have more clarity on that.

European data was notable by its absence yesterday but traders were busy discussing the unconfirmed report that the ECB might start buying corporate bonds in order to add liquidity to the markets and potential stimulate some kind of growth. That report has still not being substantiated so attention now switches to this morning's release of Purchasing managers Indices from Germany, France and the Eurozone as a whole. The forecasts are all negative so don't be surprised if the Euro is on the back foot this morning. We get a Eurozone consumer confidence index later in the day and that too is expected to be quite poor.

New Zealand inflation was below expectations at 0.3% in Quarter 3. In all practical terms that puts interest rate hikes on hold for most of the next year. The Sterling - NZ Dollar exchange rate spiked overnight and may well be resuming an upward path after that news but Sterling's performance will depend on this morning's UK retail sales data.

Away from the markets, there is a very interesting development in male fertility science. In a study undertaken by Massachusetts General Hospital over 6 years, they discovered that men who were trying for a baby with their partner were more than twice as likely to conceive if they drank at least 1½ pints of beer a day. But drinking more than 2 cups of coffee a day reduced their chances of having a baby to just 1 in 5. Physical exercise and a good diet were also important but, let's be honest, most blokes will only see the beer benefit and stop at that. Massachusetts General Hospital has just made a whole lot of new friends.