German Retail sales up

Today's Highlights

RBA leaves rates on hold

German Retail sales up

EU unemployment falls

FX Market Overview

The Reserve Bank of Australia left their base rate on hold last night at the lowest level on record. They also left the door open to further rate cuts is circumstanced demand. The Australian Dollar strengthened a little after the announcement; a little bit of relief amongst traders perhaps but it was helped by record levels of building approvals in Australia. That AUD strength isn't likely to be a long term position though; further Australian Dollar weakness ought to follow as traders get used to the nervous nature of the RBA's statement.

This morning started with data showing improved German retail sales and a sharp rise in UK construction activity. These two kind of counter balanced each other as far as the Sterling - Euro exchange rate is concerned but, having tested the technical highs yesterday, The Pound has given up some of its gains overnight. Inflation expectations in the UK have fallen to their lowest level in 6 years and that is no surprise when UK inflation is at a record low but it does undermine any thoughts of higher interest rates and that weakens the Pound.

On the other side of the Channel, another fall in Eurozone unemployment is very welcome, although 11.2% is still historically very high. The Euro has rebounded a tad but it what they used to refer to - rather gruesomely - as a dead-cat bounce. Where do these descriptions come from? Sickoes.

Tuesday's data diary is the thinnest of the week. This afternoon does bring Canadian economic growth data and the markets are expecting a marginal rise compared to the last figure of 1.9% annualised. That will be interesting to see ahead of tomorrow's Bank of Canada interest rate decision. The most likely outcome from that is a 'no change' decision but the markets are factoring in the possibility of a 25 basis point cut. Therefore, if the BOC leaves the base rate on hold, we can expect a little CAD strength. Beware.

And the 'take it literally' award goes to the hotel restaurant staff who, when a client ordered cheese and biscuits, delivered a plate with Brie and other cheeses plus bourbons, custard creams and a jammy dodger. Whatever you do, don't go there and order toad in the hole. Bad Bad Bad.