RBNZ cuts NZ base rate

Today's Highlights

• RBNZ cuts NZ base rate

• Chinese trade surplus more than halved

• Sterling buffeted by Brexit uncertainty …again

 

Current Market Overview

RBNZ cuts NZ base rate

The Reserve Bank of New Zealand did as expected and cut their official lending rate by 25 basis points to 1.5% last night. Governor Adrian Orr said the economic outlook was more balanced than it has been but didn't rule out further interest rate cuts. As you might expect, the GBPNZD rate rose a little on the news, spiking fleetingly to test NZD 2.00 to the Pound but has stabilised around 1.97 this morning. 

Rand battered by election uncertainty

The other currency that is plenty lively is the South African Rand. There is a general election happening today in South Africa and loads of speculation as to whether the ANC can stave off challengers after the ANC has been the subject of so many bribery and corruption issues. This week, the Sterling - Rand rate has been up at R19 and down to R18.40 and is roughly R18.70 as I write. Where it will be when the votes are counted is known to no one but you can manage the risk of adverse movement and perhaps take advantage of any spikes through automated orders. Ask you Halo contact if you are not familiar with those tactics.

July 1st possible Brexit date

The other side of the GBPZAR rate is obviously the Pound. That has had a lively few days as the impact of the UK local elections is still reverberating around parliament and Sterling has fallen back a little after it was announced that a deal cannot be done before the EU elections, so the UK will have to spend an estimated £100 million returning MEPs to a parliament the UK will leave as soon as a deal can be done or on 1st July is Prime Minister May is as good as the rumours.  What a waste of time and effort. However, this morning's reported 5.0% rise in UK house prices; courtesy of the Halifax, won't do Sterling's prospects any harm. 

Chinese trade surplus slashed

We also heard overnight that Chinese import and export data was very mixed. A fall in exports of 2.7% and a rise in imports of 4.0% more than halved their trade surplus. That is a concern for China's supplier nations, like Australasia and Japan et al. 

The Euro has benefitted from an uplift in German industrial production. The markets forecast a minus 0.5% figure and the actual number was 0.5% in the positive. It will be interesting to see what the ECB president, Mario Draghi makes of that when he speaks at 12.30 GMT. 

This afternoon brings the US oil inventories data which has been influential of late and we will hear from a member of the US Federal Reserve. Otherwise it is a largely quiet afternoon. 

Was Paul McCartney substituted in 1966?

And conspiracy theorists are convinced Paul McCartney was killed in a car crash in 1966 and was replaced by a lookalike. They cite the decapitated dolls on the album cover for Yesterday and Today as a reference to his death. Sounds like tosh until you consider whether the man who wrote Eleanor Rigby, the Long and Winding Road, Paperback Writer and Come Together could also deliver The Frog Chorus and the blandness of Ebony and Ivory. Maybe the theorists have a point.