The Bank of England duly followed the Federal Reserve and left interest rates unchanged, citing uncertainty over trade and inflation, as did the Fed. The Swiss National Bank cut rates by 25 basis points, with worries over deflation, while the Norges Bank and Riksbank also cut rates. The lower rates are needed to rescue these European economies from a deep and extended recession. The Israeli/Iranian conflict rages on and awaits the escalation of a US intervention. The EUR drifted below 1.1450, while the GBP held 13450, following the Bank of England decision.
Commodity currencies were panned overnight, with the NZD crashing to 0.5960, while the AUD slumped to 0.6450. This was despite some rather benign economic data, including steady Australian employment data and NZ GDP growth improving slightly. Markets are perhaps beginning to realise that the ‘Emperor has no clothes’. These trade exposed commodity countries, are not coping well economically and the prospect of trade disruptions with the US, looms large.
