Still not moving

4 minute read


Most of Wednesday' US statistics were of the ho-hum variety. MBA mortgage applications were up by 13.5%. Import and export prices were both down by an annual 0.6%. Crude oil stocks were down by 2.7m bbl on the week. Of greater interest were the NAHB housing market index, which improved by two points to 58 in January (50 represents breakeven) and the Federal Reserve's Beige Book, otherwise known as  the Summary of Commentary on Current Economic Conditions. The Fed report found "eight of twelve Federal Reserve Districts reporting modest to moderate growth".  

None of the above were enough to create a burning desire for the USD among investors but neither did they give any cause for immediate concern about the US economy. The dollar was mostly higher on the day, but not by much.


The theoretical highlight of the EUR's day was the pan-Euroland consumer price index data which came out this morning. They put the headline rate of inflation at 1.6% and the "core" rate, excluding food and energy, at 1.0%. Both numbers were in line with last week's provisional figures so failed to create a stir. Construction output was all but flat in November and 0.9% more than in the same month in 2017.

A good-news story from the euro zone originated in Athens, where the Greek prime minister won a vote of confidence by 151votes to 148. It was not a landslide victory but anything above 50% would have sufficed. The EUR was minutely lower on the day, falling by 0.1%.


The Loonie remained under its blanket, maintaining a distinctly low profile. There were no Canadian data to guide investors and no developments on the political stage. Save for a dozen cents, oil prices were unchanged on the day and investors saw little reason to trouble the CAD.

The CAD covered a range of less than three quarters of a cent, eventually giving up an insignificant 0.1% to the USD.


For the second day in succession there was an important vote in the UK Parliament, this one on a motion of no confidence in the government. As expected, the government won the day. Members of the ruling Conservative party who had rebelled on Tuesday in the Brexit vote returned to the fold in support of their leader. The de facto Brexiteer-in-chief, Jacob Rees-Mogg summed it up when he told a TV interviewer that he would never vote to "put a Marxist [Labour's Jeremy Corbyn] in Downing Street".  

Bank of England governor Mark Carney testified to the House of Commons Treasury Committee, regarding the bank's Financial Stability Report. He made clear to the MPs on the committee that "the markets, like the country, are looking to Parliament for direction, and one could expect continued volatility". On this occasion the volatility cancelled itself out and the GBP in unchanged on the day.


Like the EUR and the CAD the JPY lost an infinitesimal 0.1% on the day after first weakening then recovering by 0.4%. There were no Japanese economic data overnight to affect it.

Bloomberg carried a story about where it might go next. Hideo Hayakawa, once the chief economist at the Bank of Japan, told the news agency that the JPY "is likely to reach its strongest level in more than six years if Japan enters a recession, which could come as early as the fall of this year". He went on to say "I don't think it will hit the 70s but the 80s is quite likely". (At the time of writing the JPY is trading at 108.8 per dollar.)

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