Was the market asleep yesterday?

Exchange rates more or less at the same 

Foreign exchange rates on the whole start today more or less at the exact same levels of yesterday morning. Bank of England Governor Mark Carney did try to spice things up during his Economic Affairs Committee speech, having made reference to the growing uncertainty surrounding the economic outlook leading into the UK’s EU referendum vote, and reiterated his view that a loss of business within the UK’s financial sector would hinder growth prospects, should the outcome be Brexit. 

Carney indicated that the Bank of England still has room for conventional monetary measures, which may be called upon should UK economic conditions flounder after a Brexit outcome, although there is no appetite at all to dip into negative rates territory within the Bank of England. 

No reaction from sterling

So the message is clear, interest rates in the UK could be tweaked below the current 0.5% level. There was no reaction from sterling, perhaps EU referendum fatigue is creeping in? 

News relating to the oil price and current production levels continues to dominate. A somewhat surprising consequence of the oil production standoff between OPEC and other global oil producers, with the glut having driven down prices for over 18 months now, which has impacted the world’s largest oil producer Saudi Arabian, whose finances are being stretched by the weakness in price. 

Elsewhere the Euro was unable to benefit from an uplift in German Investor confidence as measured by the ZEW expectation index. Confidence rose for a second month taking the reading to its highest level this year at 11.2 for April, up from 4.3 reported in March. The recent rebound in global equity markets, further European Central Bank stimulus measures to help support growth, and improving economic conditions from China have helped rally current sentiment, although it has to be said that Britain’s possible exit from the EU is never far from the minds of respondents with changes in UK opinion polls likely to sway near term views. 

German confidence was on the up

Whilst German confidence was on the up, Italian bankers were running around with the begging bowl trying to shore up their finances. 

Italy’s banking authorities have made it clear that much needs to be done to help shore up the Italian financial system. Prime Minister Matteo Renzi continues with the help of the Italian authorities to impose reform measures aimed at making Italian banks financially safer and less likely to fail or to spread contagion. With €360 billion worth of doubtful loans burdening the Italian banking system the need to finalise a new funding plan, and to take steps to deal with non-performing loans as soon as possible, is a major concern for the EU as well. 

There is little to watch for today

UK’s unemployment rate has already been released and came in on expectations at 5.1% and unchanged on the previous months result. There are now 22.9 million people working full-time in the UK, 289,000 more than a year earlier. The pound was unchanged on this release. 

ECB President Mario Draghi and Bank of Canada Governor Stephen Poloz are due to speak later today; perhaps they can help raise attention levels.