Spin doesn’t get much more blatant but I have to admire the bravado of the Oxbridge set. The UK’s top universities have declared that they absolutely have to charge the maximum they can get away with otherwise people will question their commitment to excellence. In other words, we have to ravage your bank accounts or you won’t believe we’re serious. It’s genius isn’t it.

Sadly, that was about the most interesting thing in the news yesterday. A lack of data meant traders were left to their own devices. There was a flurry of excitement when China unexpectedly announced a 25 basis point interest rate hike. We knew they were voicing a commitment to slowing economic growth but the actions had been rather lacking. However, this is the third such hike since October so perhaps they are starting to take the bull by the horns.

The only other news was the fact that an auction of $32 billion worth of US Treasury certificates drew its lowest overseas demand from bank bidders since 2007. That caused some concern that, as global economies pick up, the demand for the safe haven of the US Treasury will lessen and that may make funding an issue for the US authorities. The change in sentiment towards safe haven buying saw the US Dollar weaken against the Euro and some other currencies. The Euro was pretty quiet on the day as traders largely ignored the news that the 17 euro member states are planning an extraordinary meeting in March to try to agree a plan of action to avoid any repeat of the 2008 credit crunch. Good luck with that guys.

The Canadian Dollar lost some ground against the US Dollar though because events in Canada’s chief export market are bound to affect the Canadian economy and therefore the Canadian Dollar.

Sterling had a poor day after the Chancellor of the Exchequer announced an additional £800 million of taxes on the UK banks. If you look at the profits and bonus pots, this is a trifling amount for the banks but it did harm sentiment. I guess that is perhaps another £800 million which won’t be spent on champagne, cars and houses in the south east and Edinburgh. Sterling regained a little ground overnight when the British Retail Consortium announced that January’s shop price inflation was 2.5% year on year. That’s positive for the Pound but the sharp drop on retail activity in December due to poor weather will have had an effect along with higher commodity and food prices.

The New Zealand Dollar weakened after NZ Finance Minister, Bill English told the NZ Parliament it was “possible” that the NZ economy slipped into recession in the second half of 2010. With the global slowdown it is not so surprising but having a government minister voice such a concern has a greater impact than just general sentiment. The NZ Dollar is weaker than its Australian counterpart today but still within recent ranges.

Today brings UK and German trade balance data. We have already seen the German data which was disappointing. That was to be expected because recent manufacturing and production data has been poor but we are expecting the UK trade gap to have shrunk a tad so that will be good for the Pound. And the Bank of England starts its two day interest rate setting meeting today. We don’t expect any change when the announcement is made tomorrow but traders are split over when we will start to see UK interest rate hikes so they will be desperately seeking clues in the statement after the meeting.

And elsewhere, Australian employment data is due tonight and that should show 17,500 fresh jobs were created in January. That’ll be the 11th straight month of gains if it is true and the Australian Dollar should strengthen on the news. If you need to purchase Aussie Dollars in the short term, you may wish to either do so today to avoid any risk or place an order in the market overnight to take advantage of the expected volatility.

I’ll leave you with news of a theme park ride that appears to be scarier than the designers imagined. Apparently, Storm Surge, a new rise at Thorpe Park has had to be moved because the guys building the ride were seeing headless monk ghosts on site. It was being built above the site of an ancient abbey and people who believe that kind of thing are investigating.


Quote

It is my belief, you cannot deal with the most serious things in the world unless you understand the most amusing.
Winston Churchill