A half-hearted swing from caution towards risk left the Swiss franc at the back of the field and the Norwegian krone in the lead. The economic data tended to support that line, though none of them were massively bullish. Sterling was outshone by the commodity-related currencies.
Once again the shape of the market owed at least as much to sentiment as to the individual ecostats. A case in point was the Swedish krona. It took third place behind the Australian dollar despite an awful set of industrial production data. Output in 2019 was down by 3.2% on the previous year and new orders fell 4.7%. The krona did not flinch. The services sector purchasing managers’ indices came in mostly above forecast on both sides of the Atlantic. In Euroland Germany’s 54.2 was the best of the bunch and in line with forecast, while even last-placed France still managed to be positive at 51.0. The composite measures were also all above 50.
Britain’s services sector PMI was a point higher than forecast at 53.9. It was the strongest reading since September 2018. With a “robust and accelerated increase in new orders” growth expectations continue to grow”. In the United States the Markit PMI hit a 10-month high while the longer-established ISM measure clocked a 120th consecutive month of expansion.
No crimes or misdemeanours
America’s Republican Senate acquitted the Republican president, with only one member of the party – Mitt Romney – stepping away from the party line. The dollar was neither distressed nor elated. European Central Bank president Christine Lagarde had equally little impact when she spoke in Paris.
Ms Lagarde was accepting the award of Grand Prix de l’Économie 2019 from Les Echos and her comments were appropriately anodyne. She did acknowledge, though, that concern for the global economy has switched from trade wars to coronavirus. The ECB president will be on her feet again, potentially with more effect on the euro, when she addresses the Committee on Economic and Monetary Affairs (ECON) of the European Parliament.
Ahead of Ms Lagarde’s appearance, Australia printed its trade and retail sales data and Germany reported on factory orders. The Australian numbers were mildly disappointing and German orders were typically awful, with an 8.7% annual decline.
EU growth and North American jobs
The ECB president will appear in Brussels this morning at roughly the same time as the European Commission’s latest economic growth forecasts. Tonight the Reserve Bank of Australia releases its monetary policy statement and on Friday the US Bureau of Labor Statistics and Statistics Canada will both publish their monthly employment reports.
Of those, the US employment report – specifically the monthly change in nonfarm payrolls – is the most important for financial markets. The consensus is for 160k new jobs in January. In Canada analysts are looking for an additional 15k positions, though their predictions have often been wide of the mark in recent months.
The only UK data ahead of the weekend come from the Halifax, which will report on house prices. Filling in the empty spaces, China will report on trade, Germany on industrial production and the United States on wholesale inventories. There are PMIs from Australia and Canada.