Little action on a slow day
12/Mar/2014 • Currency Updates•
It was certainly a quieter day for the pound than it was on Monday, as dollar and euro buyers eased off slightly after a strong few days. Sterling saw slight movement over the middle of the session but ended up pretty much even across the board. Eyes were on Westminster as the BoE Governor faced questioning from the Parliamentary Finance Committee, and the lack of volatility in the market yesterday was due partly to the dry nature of the meeting.
Mark Carney’s testimony was far reaching and in depth, although the highlights reel will be rather short and uninspiring. The Governor reiterated his dovish stance on interest rates, noting again that a rise is not needed at least while the economy is at 1.5% spare capacity. He also steered clear of both Scottish independence and the Forex market investigation, only promising a ‘root and branch’ of the Bank’s information gathering efforts.
Industrial production came ever so slightly under expectations yoy in Jan at 2.9%, 0.1% below the predicted levels. However, it was still a whole per cent higher than last year’s reading, and analysts have also pointed to the recent storms as a possible catalyst. Manufacturing production, in contract, was 0.1% above expectations at 0.4% growth MoM for January.
There is no data of note tomorrow.
Like sterling it was a quiet day for the single currency. A little bit of data made the rate waver slightly but in reality there were no swings of any lasting nature, and the euro finished the European session where it started against both the pound and the dollar.
Germany saw an increase in both imports and exports, although with the former outweighing the latter the overall trade balance decreased. It is however, still in surplus, one of the few major western economics to be so. The Italian economy shrank 0.9% YoY in Q4 last year, showing just how much work there is to be done for the recently anointed PM, Matteo Renzi, while Portugal recorded a healthy expansion of 1.7% in the same period.
Greece posted the second bit of positive data in as many days, which is excellent news for the most maligned of the Eurozone economies. GDP results of -2.3% for Q4, compared with -3% last time, gives a glimmer of hope for the future. This came on the same day as the Governor of the central bank of Cyprus, Panicos Demetriades, was forced to resign following criticism of his handling of last year’s banking collapse.
Today sees euro-wide industrial production data for January, as well as inflation offerings from the two Iberian states, while tomorrow’s monthly report from the ECB will probably produce more volatility.
The dollar had little to bounce off against yesterday; no real data from the US or the rest of the world meant no movement in money markets.
The stock market also dropped off slightly, ending a recent bull run stretching back to last week. The only data from yesterday was business optimism, which decreased slightly by 2.7 to 91.4, the Redbook index for early March, which was an improvement on previous readings, and wholesale inventories, which increased 0.2 to 0.6%.
There has been a slight hiccup in the negotiations for a historic EU-US trade deal, with an investor-state settlement dispute the centre of an increasingly vocal debate.
Today sees mortgage applications for the first week of March.