For ten years the people of St Neots in Huntingdonshire have been pushing for a cinema and food court to replace the bus shelter where the town’s listless youth currently congregate for their recreation. Work on the £8m Rowley Arts Centre eventually began last year but came to a halt six months later because local vigilantes found the frame of the building to be 75cm adrift from the planning consent. The builders had to tear down the structure and start again. Their second attempt has apparently been no more successful; this time the frame is 30cm too far to the west and 20cm too far north. Although the centre covers 3,000 sq metres, meaning the misplacement represents just 0.1% of the footprint, the disgruntled neighbours want to see it demolished again. Ah, the home counties…
Their attention to detail would be admired by the investors who spend their days dissecting the minutiae of US economic data in the hope of divining the outlook for Federal Reserve Monetary policy. The grist to their mill yesterday was a 12.2% annual rise in the Case-Shiller index of metropolitan house prices and confirmation of a two-point deterioration in the Conference Board’s index of consumer confidence. Investors calculated that higher house prices would bring forward the end of the Fed’s monetary relaxation and that the reduced confidence would not postpone it any more than the provisional figure had done. Having retreated during London’s morning session the dollar strengthened after the release of the figures and is a cent higher on the day against the pound.
According to Moneycorp the euro is higher too, by an identical proportion. And the Swiss franc. The yen, the rand, the Norwegian krone and the NZ dollar are also all firmer against sterling by roughly the same amount. It all looks suspiciously as though investors were unloading pounds on Wednesday. There were no dodgy UK data to encourage the selling and no damaging headline news about the UK economy; the move appeared to have been provoked by the re-emergence of suspicions that the Bank of England would come out with something horrid after tomorrow’s Monetary Policy Committee meeting. There is no real fear that the MPC will lower the Bank Rate or restart its Asset Purchase Programme. The worry is that the Bank will issue “guidance” on the future of interest rates; specifically, that it will set out a framework to keep rates at near-zero levels for two, three, four (pick a number) years. By doing so it would put sterling at a disadvantage to the US dollar, where asset purchases are on days-to-go, and the euro, where the central bank has never been allowed to indulge in such progressive stimulus.
Figures released at midnight, showing reduced pessimism among British consumers and lower prices in the shops, did nothing to stop the rot and there are no UK ecostats on today’s agenda to come to sterling’s rescue. There is not much there of any consequence to the euro either. French consumer spending, already out, was down by -0.8% in May. German unemployment could be down by a couple of thousand with the unemployment rate steady at 6.8%. In Italy that rate might be a touch higher at 12.3% and in Euroland a tick lower at 12.1%.
Not a lot to go on there, then, and little to distract from a busy afternoon for the US dollar. The data cover ADP’s employment change, the Chicago purchasing managers’ index and second quarter gross domestic product. Annualized growth of 1% is penciled in for the three months, equivalent to quarterly growth of 0.3%. Readers will recall that Britain’s quarterly growth over the same period was 0.6%: they will also remember that investors were disappointed it wasn’t higher. Anything above 1% for US GDP this afternoon could be positive for the dollar.
With all that out of the way the stage will be clear for the Federal Reserve’s momentous monetary policy announcement and Chairman Bernanke’s pivotal press conference. Stay tuned…
Major economic releases due today
|German Unemployment Change (Jul)|
|EC CPI Estimate YOY (Jun)|
|US Q2 GDP (annualised)|
|New Zealand Dollar||1.9073|
Date (e.g. 24/2/11)
Time (e.g. 16:27)
|Indicative rates as of|
Provided by Moneycorp, one of the best online forex