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Daily Brief

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Spiky yen

USD

It was a slow start for the dollar, at least as far as US economic data were concerned. The Redbook Index put December's retail sales 9.3% above the same month in 2017 and Markit's purchasing managers' index for the manufacturing sector came in at 53.8, in line with forecast but a point and a half down from the previous month's upwardly-revised 55.3.  

Away from the hard economic data investors had an eye on anecdotal evidence that slowing growth in China is having a wider dampening effect. Apple boss Tim Cook warned investors that revenue would be hurt by falling sales there, prompting them to take cover in the safe haven-yen and, to an extent, the USD.

EUR

Euroland economic data were no more forthcoming this morning. Spain lost a net 50.6k jobs in December, M3 money supply expanded by 3.7% in the year to November and private loans to businesses and individuals were up by an annual 3.3%. The numbers were unremarkable and had no impact on the EUR. It lost 0.5% to the USD.

CAD

Canada's manufacturing PMI was a point and a quarter lower in December, at 53.6. The Loonie moved higher after the data came out but it was not clear the two events constituted cause and effect.

As in the two previous business days, investors saw no reason to get involved with the CAD. It covered a range of less than one cent and was unchanged on the day.

GBP

Investors had not been particularly impressed by Wednesday's stronger-than-expected  purchasing managers' index from the manufacturing sector and they were even less taken with this morning's 52.8 PMI reading for construction. Builders reported a three-month low for business activity growth, while they were optimistic about the prospects for transport and energy infrastructure projects in 2019.

It was the dreaded Brexit that held investors' attention though, not the economic data. There was not much to go on; just a comment from foreign secretary Jeremy Hunt that a second referendum would be an awful idea.  Yet the parliamentary battle will swing back into action next week and that prospect did not fill investors with joy. The GBP lost 0.9% on the day.

JPY

The unlikely hero - or maybe the villain - of the day was the JPY. Apple's profit warning was one of the reasons why investors decided late in the day that they might be safer in the yen. With Tokyo still on holiday the demand for JPY sent it skywards as algorithms and stop-loss buyers competed in an illiquid market.  

The JPY spiked 4% higher against the USD before a retracement took it most of the way back. On the day the JPY is 1.2% firmer.

USD receives some safe-haven help

USD receives some safe-haven help

EUR easier on unremarkable data

EUR easier on unremarkable data

CAD stays away from the action

CAD stays away from the action

GBP softer on renewed Brexit concerns

GBP softer on renewed Brexit concerns

JPY out in the lead after fierce spike

JPY out in the lead after fierce spike

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