RBA cuts cash rate to 3.25%
It is more than three months since Julian Assange, the Wikileaks chap, sought refuge in Ecuador's embassy in London. Since then the police have laid siege to the place in order to nab him if he emerges. There is only one door, yet it takes four officers to watch it, at least one of whom occupies a mobile command post parked on the street. More remarkably, during its first three months the operation cost over £11k a day. A day. That's £460 an hour. Maybe the one in the mobile command post spends all day on the phone to his bank's call centre, listing to the music.
The Australian dollar had to face the music this morning after the Reserve Bank of Australia (RBA) lowered its cash rate by 25 basis points to 3.25%. Whilst investors had been anticipating a rate cut later in the year, few had expected the move to come this month. In the statement accompanying the announcement the RBA governor said "it was appropriate for the stance of monetary policy to be a little more accommodative" but offered no clear hint about the likelihood of further easing. The rate cut hurt the Aussie dollar, which fell by half a cent against the US Dollar and by a full cent against the pound, the New Zealand dollar and the euro.
Not surprisingly, sterling performed best against the Aussie over the last 24 hours. It also strengthened against the US dollar and the Japanese yen and held steady against the NZ and Canadian dollars. The euro did better though, firming by a farthing and more than half a US cent.
Quite what drove the euro higher is a bit of a mystery. It was already on the way up by the time London got under way and it continued its rally until lunchtime. A post-prandial push took it a little further but it balked at an important technical resistance level. Since close of play in London the euro, the pound and the US dollar have been steady against one another.
Monday's purchasing managers' index (PMI) shoot-out was as interesting as ever. The UK measure was a point lower at 48.4 and a disappointment for sterling. Euroland clocked a 46.1 with Switzerland at 43.6 and the United States leading the field with world-beating scores of 51.1 and 51.5 (competitive capitalism provides America and China with two manufacturing PMIs). Individual national readings from around the euro area ranged from 42.7 in France to 47.4 in Germany.
This morning Nationwide has reported a monthly decline of -0.4% in UK house prices .The average home cost £163,964 in September, -1.4% less than a year ago. The UK construction PMI appears later, followed by Euroland factory gate prices. There is nothing of any consequence from North America. Judging by the way everything ground to a halt yesterday evening, and looking at the dearth of data on the day's agenda, it is not difficult to imagine a quiet day ahead.