The Bank of Canada meeting today maintained its benchmark interest rate at one per cent. Quoted by Bloomberg, Aaron Fennell, a futures specialist at Bank of Nova Scotia’s ScotiaMcLeod unit, said that, “we’re a long way from getting back to normal interest rates. If they do start raising rates in Canada, they’re going to do so very cautiously, 25 basis points at a time. They’ll probably do it two times and then lay off for a while to see what happens.” Economic data from the country yesterday was poor, with core retail sales showing a drop of 0.3%, against a forecast 0.1% gain. These figures were tempered somewhat by a strong rise in automobile sales, which are excluded from the core figure, as their readings tend to be volatile.

The euro saw violent swings, as market rumours conspired with exceptional data to trigger erratic moves. The market opened with a very sharp wave of euro selling, after German’s financial authority, BaFin, were reported to have asked two big institutions to restructure themselves.This pointed to weakness in the German banking sector. This move was compounded by a rumour that swept like wildfire that the head of the German central bank, the Bundesbank, Jens Weidmann was set to resign. As such, the euro fell by almost a percent against many of its counterparts in a matter of minutes. We then saw economic sentiment data, where a figure above 0.0 indicates optimism, from Germany show a reading of 31.2, massively above the forecast of 14.1 and a previous number of 7.6. Spain also saw a successful bond auction, and Mario Draghi gave another bullish speech where he claimed that the “darkest clouds” over the euro area have subsided.

The English Prime Minister, David Cameron offers the British public the first “in-out referendum” on membership of the European Union in more than 40 years.

 

 

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