BOE minutes may shed light on rate hike agenda

Today's Highlights

AUD overlooks inflation drop

Greek banks under pressure

BOE minutes may shed light on rate hike agenda

FX Market Overview

Australian inflation rose in line with expectations at an annualised 1.3%. That is down from the previous month's 1.7% and roughly in the middle of the reserve Bank of Australia's target range. It failed to trouble the Australian Dollar which is still suffering from traders' expectations of interest rate cuts from the RBA. A cut in May is probably although, as inflation clearly isn't a problem, some believe the RBA will wait for clearer signs of economic slowdown before they act.

This morning brings the publication of the minutes from the last Bank of England meeting. The Monetary Policy Committee left everything on hold at that meeting but we know, opinions within the MPC are divided over when or by how much interest rate should start to rise again from the current 0.5% base back to some semblance of normality. Perhaps the minutes will shine some light on the heat in that disagreement. With 0.0% inflation, it is hard to see an argument for a pre-emptive rate hike but anything can be justified if you spin it hard enough.

Other than some retail and industrial data from Italy, this morning's data diary lacks content. In spite of that, the euro has the potential to be volatile. The ECB has tightened the screw on Greek banks by adjusting the value of the collateral they can use to obtain funding from their own central bank. There are even rumours that the ECB is planning to pull the plug on any support from the ECB itself. That would leave many Greek banks to fail in a matter of months. As a result, it is getting very expensive for Greek banks to borrow money and the same could be said for the Greek Government unless they can secure this latest tranche of cheap money from Europe. That is still in the balance.

They say guns don't kill people, people kill people. It seems though that people without the bacon in their burgers who also have guns are the greatest threat. In Michigan, Shaneka Torres, was jailed for between 3 and 7 years for firing her gun in a MacDonald's restaurant after she was twice served a burger without the bacon she ordered. Good lord, fancy ordering a burger twice and getting no bacon. It's enough to drive anyone to gun crime.