Daily Brief

Daily Brief

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Decisions, decisions

The Old Lady speaks

It will be the turn of the Bank of England to leave interest rates unchanged today. Or will it? The consensus is for no change but, as the FT points out "it looks to be the most finely balanced decision in years".

Earlier in the month Monetary Policy Committee members were falling over themselves to set the scene for a rate cut today. Recently they have been strangely silent on the matter, perhaps because of improved economic data. The bank will also publish its quarterly Monetary Policy Report (the renamed Inflation Report).

There are data today for Euroland business and consumer confidence, German inflation and US gross domestic product in Q4. Tomorrow's ecostat agenda is rather more lengthy. Japan reports on retail sales, industrial production and housing starts. There are UK figures for consumer confidence and mortgage approvals. Germany and Switzerland report on retail sales. There are GDP figures from France , Italy, Spain and pan-Euroland. North American ecostats on Friday cover US personal spending and income and consumer confidence as well as Canadian GDP for November. China prints its two services sector purchasing managers' indices, which might be dented by the virus.

 

Coronavirus risks reassert themselves

The brief relief afforded to risky assets on Tuesday had run its course by yesterday afternoon. The Wuhan coronavirus remains a worry for the global economy and investors have reverted to their default risk-off stance.

The outbreak is of sufficient enormity to have warranted consideration by the Federal Reserve in its monetary policy decision. After the US central bank left its benchmark interest rate unchanged on Wednesday, Fed chairman Jay Powell said there would "clearly be implications at least in the near term" for growth in China and elsewhere.

The Swiss franc and Norwegian krone swapped ends once again. A 2.5% fall in oil prices dragged the krone back down and the franc shared first place with the equally safe-haven Japanese yen, a third of a cent higher against the pound. On average sterling was just about unchanged on the day and flat against the US dollar and euro.

 

Nothing but the Fed

By and large, Wednesday's economic data were nondescript. A handful of confidence measures told no coherent story and the rest of the statistics were easily outshone by the Fed rate decision, predictable though it was.

Consumers were more confident in France, Germany and Italy, less confident in Sweden and equally confident in Japan. Businesses in Sweden and Italy were more upbeat while in Switzerland they were less so.

Nationwide reported a "modest pick-up in house price growth in January", with a monthly change of 0.5% that left prices on average 1.9% higher on the year. It followed 12 successive months in which annual price growth had been less than 1%. In the United States, wholesale inventories fell by a provisional 0.1% and pending home sales slumped 4.9%.

CHF: Shares safe-haven bonus with JPY

CHF: Shares safe-haven bonus with JPY

NOK: Back to the back

NOK: Back to the back

USD: Benchmark interest rate unchanged

USD: Benchmark interest rate unchanged

GBP: BoE rate decision today

GBP: BoE rate decision today

EUR: Fourth quarter GDP coming up

EUR: Fourth quarter GDP coming up

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