Safety first

3 minute read


The excitement on Thursday, once again, was to be found in the stock market not in exchange rates. In a two-hour stint the DJ30 jumped more than 4% before settling into a new, higher trading range. Unfortunately the success of the Dow did not rub off onto the USD, which had a middling day.

That might have had something to do with the Conference Board's index of consumer confidence. After a moderate decline in November it dropped another eight points in December to 128.1. Back-to-back declines in expectations reflect "an increasing concern that the pace of economic growth will begin moderating in the first half of 2019".


The EUR took second place between the Swiss franc and the JPY.  That positioning indicates a demand for safety among investors, who are unnerved by the volatility in global equity markets. It strengthened by 0.4% against the USD.

The majority of today's euro zone ecostats came from Spain. Inflation was lower than expected at a provisional 1.2% and quarterly GDP growth in Q3 was unchanged at 0.6%. German import prices increased by 3.1% in the year to November, less than the forecast 3.6%. German inflation data are scheduled for later this morning, with a headline rate of 1.9% pencilled in.


A net gain of 0.1% left the Loonie all but unchanged against the USD. As in the States, a rebound in Canadian share prices was of no obvious help to the CAD.

Oil prices did not help it either, though at least they did no damage. A 1% rise in the price of West Texas Intermediate (WTI) crude was a step in the right direction but it was a very small step in the context of the 18-month low that was touched on Christmas Eve.


Sterling is seldom the busiest currency on the block in the dog days between Christmas and the new year. So it was yesterday, with the GBP edging 0.2% higher against the USD.

This morning's sole statistic was the narrow measure of mortgage approvals by British Bankers Association members in November. The number was slightly higher than expected at 39.4k and it made no difference to sterling.  All remains quiet in the weird world of Brexit: A request yesterday by opposition leader Jeremy Corbyn to cut short Parliament's holiday recess, and recommence the debate, fell on stony ground.


Japan published a host of economic data overnight. Consumer prices in Tokyo increased by 0.3% in the year to December; excluding food and energy they were up by 0.6%. Unemployment ticked up to 2.5%. Industrial production fell 1.1% in December and retail sales were down by a monthly 1.0%.  

They were poor numbers, especially those for output and sales. And they had no noticeable impact on the yen, which is 0.4% higher on the day. Investors care more about safety, in a world of gyrating equity prices, than they do about the statistical minutiae.

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