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Happiness day

Happier together

The theme of today's United Nations International Day of Happiness is "Happier together". The irony will not be lost on Theresa May as she pens her supplication to the EU president requesting extra time for Article 50. The media, in their different ways,  all find it emotive but investors seem not to be unduly concerned. Yet.

The front pages of today's papers are peppered with references to the prime minister's need to extend Article 50. In the Times she "pleads", in the Guardian and Daily Mirror she "begs". It is up to Mrs May how much extra time she asks of the EU. "A cabinet source told the BBC she… plans to ask the EU to agree to postpone the UKs departure until 30 June, but with an option of a longer delay as well." Such a lack of precision might not go down well with EU leaders.

Investors should know by the end of the EU summit tomorrow what was asked and what was granted. Until then they seem to be keeping an open mind on the matter. Sterling was unchanged on average yesterday against the major currencies and all but flat against the USD, the EUR and the JPY.

Good jobs

It came a day early, but there was some happiness for sterling on Tuesday when the UK employment data appeared. The rate of unemployment fell to a 44-year low of 3.9% while wages continued to outpace inflation, rising by an annual 3.4%.  

The data from Euroland were mixed and unhelpful. Italy's trade surplus shrank dramatically. ZEW found investors less pessimistic in Germany and pan-Euroland. Euro zone construction output unexpectedly fell in January.

Data from the States were simply unhelpful. The Redbook Index found retail sales falling and factory orders increased by only 0.1% in January, perhaps explaining last Friday's 0.1% monthly increase in industrial production for February.

Fed on hold

At a global level the highlight of today's agenda is the Federal Reserve's monetary policy statement. No change is expected. Domestically the focus will be on the raft of UK consumer, producer and house price indices. Headline inflation is pencilled in at an unchanged 1.8%.

Over the last couple of months Fed officials have been at pains to insist that they are being "patient" in awaiting developments before adjusting interest rates. That patience is unlikely to have run out yet, so the Funds Rate target range should remain at 2.25%-2.5%. Analysts will read what they can into the "dot plot" of committee members' expectations for the future.

Other data today cover South African retail sales and UK manufacturing orders. Tonight New Zealand reveals the figures for gross domestic product in the fourth quarter of 2018: growth of 0.6% is predicted. Also tonight come the Australian employment data for February. These have a habit of being adrift from forecast, so the actual number of new jobs might not match the expected 15k.

GBP Steady on average, helped by employment figures

GBP Steady on average, helped by employment figures

USD Unchanged against euro and yen

USD Unchanged against euro and yen

NZD Awaits fourth quarter GDP

NZD Awaits fourth quarter GDP

AUD Employment data due tonight

AUD Employment data due tonight

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