Today’s Highlights



  • US growth rate revised downward




  • UK GDP data due this morning




  • Change of PM in Australia overlooked by AUD




FX Market Overview


DON’T GO TO WIMBLEDON!!! IT’S DANGEROUS THERE! You’ll end up with a bandage around your leg and then have to retire early. Wednesday was a very odd day within a very odd Wimbledon championship. Nadal, Federer and Sharapova are out, as are a whole bunch of walking wounded. And it has to be said that some of the women’s grunting sounds a bit feral. All in all, to quote Miranda’s mum, “Such fun”.


There were a couple of big shocks in the financial markets as well. In Australia, Prime Minister Julia Gillard was ousted after just over 3 years in office by the guy she ousted three years ago in a similar coup d’état. That was a vote of confidence plan which went a trifle wrong. However, the new/old PM, Kevin Rudd might be out in September when the next election takes place. Oddly, the Australian Dollar was largely unmoved by the news.


The other shock was a very poor final calculation for the US economic growth in Quarter 1. The previous estimates had been 2.4% but the final number came in at just 1.8%. Not only did that raise questions about how the previous estimates could have been so wrong but it also looks like it may delay the Federal Reserve’s plans to reduce their bond buying plans. America Inc is perhaps not recovering as fast as they had hoped and whist many countries would give their collective left arms for growth of that magnitude, the disappointment is palpable. The US dollar failed to react. Whether traders were in shock or whether the net in and out flows from investors with differing parameters for risk just counteracted each other is hard to tell but there is little change as we start the day.
However, the Euro – US Dollar rate is testing towards the $1.30 level and a breach of that would be significant.


Less shocking was the Chancellor’s spending statement which fell largely in line with most economists forecasts. Plans to reduce spending by £11.5 billion were announced along with a heap of other plans. Unsurprisingly everything he said was wrong according to the Shadow Chancellor and none of it comes into play for a couple of years anyway so Ho Hum. I am sure the government will be praying that today’s release of UK economic growth data doesn’t go the way of the US result. At 0.6% growth, the 2nd estimate of Q1 GDP doesn’t leave a lot of room for a downgrade but, if that does happen, expect Sterling, which weakened yesterday anyway, to drop a little further. Obviously the opposite is also true; a strong upward revision would give the Pound a fillip. Anyone expecting that? No I thought not.


“We at the Reserve Bank see the current overheated housing market as a real threat to future financial stability.” That’s how Deputy Governor Grant Spencer of the Reserve Bank of New Zealand let us know there would be no early interest rate rise in New Zealand and that they may use alternative methods to cool the overheating housing market. They are caught between a rock and a hard place though. Raise rates to cool housing and they will boost the value of the NZ Dollar which hurts exporters. Argh. What to do, what to do? The Sterling – Kiwi Dollar is balanced below its highs of recent weeks but sterling’s strength and the uncertainty over the NZ Dollar are keeping things pretty tight.


Aside from all of this, these are the last two days of the month, the quarter and the half year so there will undoubtedly be some profit taking and some traders squaring their positions. It will be volatile so it makes sense to use that to your advantage and protect yourself against the worst case scenarios. That will present some risk and some opportunity. Times like these are ripe for the use of automated orders so, if you have a short to medium term requirement in any currency pair, let your Halo Consultant know and we can talk about suitable order levels.


And bad news for football fans. Macclesfield Town Football Club has stopped allowing people to pay £20,000 and play in a proper game for 10 minutes. Ricky Nelson and I were just debating this and we reckon Chelsea, Arsenal, Man United et al could raise a significant amount of money if they charged £100,000 for 5 minutes on the pitch in a premiership game. Maybe there could even be a semi-pro or Pro-Am league with a few celebrities thrown in for good measure. That’d sell some tickets and merchandise surely.



Animal truisms


If you think dogs can’t count, try putting three biscuits in your pocket then giving Fido only two of them.


Things that upset a terrier may pass virtually unnoticed by a Great Dane.


Don’t accept your dog’s admiration as conclusive evidence that you are wonderful


Dogs have owners. Cats have staff.


Cat’s motto: No matter what you’ve done wrong, always try to make it look like the dog did it.


I wonder if other dogs think Tibetan Terriers are members of a weird religious sect?


Was the Shah Pei God’s practice run at dog design?


Who told cats their claws make great massage tools?