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UBS Morning Audio Comment: Of currencies and credit

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  • Australia saw a quarter point cut in its interest rates, which was not entirely expected (market pricing before the decision suggested a 50:50 probability). The move seems to have been motivated largely by the strength of the Australian dollar.
  • China's State Council is discussing a "workable plan" (as opposed to an "unworkable plan, presumably) to achieve convertibility for the renminbi. It follows from discussions about broadening the bank within which the currency trades.
  • The UK's BRC shop price index saw a sharp fall in the level off shop price inflation - down to 0.4% yoy in April, from 1.4%. Lower prices for foodstuffs were part of the move, and as these are high frequency purchases the decline may influence inflation perceptions.
  • The US Senior Loan Officers' survey showed ongoing accommodation from banks .Loan conditions for small businesses have continued to ease, which is likely to be critical in establishing a broad based economic recovery (small businesses are the largest employers in the private sector).

Listen to the audio version of this briefing.