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Divides of March

Oh happy day

There was good news all round on Monday. The January rebound in US retail sales was bigger than expected and Britain's prime minister secured a "legally-binding" amendment to the Irish backstop part of her withdrawal agreement. In general, investors had a more positive view of the global economy and less appetite for safe-haven currencies.

Consequently it was the Japanese yen and Swiss franc that found themselves at the bottom of the pile. Both lost 2% to sterling - two and three quarter yen and two and two thirds of a Swiss cent. The pound is an average of 1.4% higher on the day with gains of two and a quarter US cents and one and three quarter euro cents. Zero to hero in 24 hours, and all on the back of a modified withdrawal agreement that might still be rejected by parliament.

The impression is not that investors have suddenly become confident that Theresa May will win her vote this evening, but that if she does, they can live with the result. And if not, parliament can fall back on her promise of a vote tomorrow to prevent no-deal.  

US retail sales

The only ecostat that really mattered on Monday was US retail sales. There had been concern that December's sharp slowdown might signify a longer-term loss of consumers' interest in buying stuff. In fact the States matched the sales pattern seen in Europe; down in December and up in January. 

January's' sales were not an unconstrained success though. The headline figure was up by 0.2% but the previous month's decline was revised from 1.2% to 1.6%. With the control group - the figure that finds its way into the consumer price index - the 1.1% increase in January was diluted by a downward revision to December from -1.7% to -2.3%.

The effect was to dampen the positive effect of apparently good numbers. The US dollar did not exactly have a bad day but it lost a quarter of a cent to the euro and (ahem!) two and a quarter cents to sterling. Or has that already been mentioned?

Numbers

There are some important ecostats today from Britain - production, trade and gross domestic product - and the United States - inflation. The more important figures, however, will be the votes for and against the Brexit withdrawal bill this evening.

Britain's manufacturing and industrial production data have habit of looking nothing like the analysts' predictions. Today's are forecast to show manufacturing and industrial output remaining flat in January. The trade deficit is supposed to have widened slightly with GDP expanding by 0.2% on the month. Headline US inflation is pencilled in at an unchanged 1.6%.

Expectations for this evening are that Theresa May will not get the 320 votes needed to pass her bill. The opposition parties are likely to vote against it, as are the Tory Brexiteers who resisted it last time around. How investors will greet the result, whatever it turns out to be, is anybody's guess.

GBP Sterling leads as sentiment swings again

GBP Sterling leads as sentiment swings again

USD Better retail sales data spoiled by revisions

USD Better retail sales data spoiled by revisions

JPY More optimistic investors avoid the safe havens

JPY More optimistic investors avoid the safe havens

CHF Sharing the yen's wooden spoon

CHF Sharing the yen's wooden spoon

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