Sterling is magnificent
The pound moved higher ahead of Theresa May's address to parliament yesterday and it gained further ground - eventually - afterwards. Along the way it touched a 21-month high against the euro. Investors believe that parliament is on its way to winning the war against a no-deal Brexit.
There were no significant UK economic data on Tuesday and it would hardly have mattered if unemployment had doubled or retail sales halved. The prime minister's presentation was all, and it ticked most of the boxes for investors. Parliament will have another chance to reject her withdrawal plan on 12th March. Having done so, it will vote the following day on whether to agree a no-deal Brexit. With that out of the way the vote on 14th March will be whether to postpone the departure day by three months.
Questions remain about the usefulness of a three-month extension to Article 50: If parliament cannot agree after three months of debate (and nearly three years of negotiation) is it rational to expect it to do so after a further 12 weeks? But, nitpicking aside, investors believe that MPs have taken over control from ideological party leaders and that they will continue to steer Britain away from the economic cliff-edge.
The proceedings in parliament led to sterling becoming 2019's top-performing major currency. From its levels on New Year's Eve it has strengthened by an average of 3.6%. Upward progress between now and 14th March might be harder to come by.
Sterling's closest competitors yesterday were the Australian dollar and Norwegian krone. They were 0.4% behind - three quarters of an Aussie cent. The pound's biggest gains were against the US dollar and Swiss franc, both of which lost a cent and a quarter. The euro was four fifths of a cent to sterling's rear.
Looking ahead, it is hard to see what good news might crop up in the next fortnight positive enough to send the pound another step higher. If anything, investors might be tempted to take profits on long positions, sit back, and wait for something to go wrong.
The macroeconomic stuff
There were no heavyweight economic data on Tuesday and there are few on today's agenda. The heads of the Bank of England and the Federal Reserve answered questions from the House of Commons and the Senate without giving anything away.
Today's highlights are Canadian inflation and US durable goods orders. Given the Bank of Canada governor's recent observation that the future path of interest rates is "highly uncertain", the inflation numbers could exert more than their usual influence. The Loonie's performance yesterday - on average it was unchanged - suggests that investors have no expectations one way or the other. A headline rate of 1.5% is forecast.
US durable goods orders are among the most volatile and unpredictable economic statistics on the planet. That perhaps helps explain why investors pay so much attention to them. Analysts are forecasting a monthly increase of 0.2%, which almost guarantees that orders did not go up by 0.2%.