SuperMario Thursday

Some you lose
"They couldn't hit an elephant at this dist..." said General Sedgwick the moment he was killed by a Confederate sniper at the battle of Spotsylvania Court House in 1864. Yesterday's equally confident predictions here were similarly groundless. Against all the odds the analysts got it right and they got it wrong.

For once, the forecasters had (almost) correctly anticipated monthly increases in UK manufacturing and industrial production. Manufacturing output was up by a monthly 0.7%, comfortably beating the predicted 0.2% increase, while the broader industrial production measure was up by slightly less than expected at 0.3%, held back by oil and gas. Astonished investors sent the pound more than half a cent higher before realising the error of their ways.

The analysts failed, however, to anticipate the Reserve Bank of New Zealand's rate cut. Of the 17 economists polled by Bloomberg on Tuesday, all but two reckoned the central bank would keep its Official Cash Rate unchanged at 2.5%. It didn't. A quarter-percentage-point cut took the market by surprise and the Kiwi suffered a five-cent loss, half of which it is still wearing this morning.

Others you don't win
Analysts correctly predicted that the Bank of Canada would keep its benchmark interest rate steady at 0.5% yesterday, implying no change for the Canadian dollar. But even there lurked confusion. Shortly after the BoC announced its decision the price of oil moved higher, taking the Loonie with it.

There was no reaction whatsoever to the BoC's announcement that "the current stance of monetary policy is appropriate, and the target for the overnight rate remains at 1/2 per cent". The Canadian dollar remained steady for the next couple of hours. But when oil prices began to rise at teatime the Loonie set off in hot pursuit, as did the Norwegian krone.

The day's winner, though, was the South African rand, which is having a particularly bumpy ride. Only on one of the last nine working days has the rand not taken home either gold or the wooden spoon. Over that period it has strengthened by 0.6%, beaten only by the Aussie's 1.8% rise.

Whatever it takes
The only game in town today is the European Central Bank's monetary policy decision. Investors expect the bank to announce a further cut to its already-negative deposit rate and an increase in the scale of its asset purchases. They are, however, braced for disappointment.

In early December investors had been wound up to expect a significant relaxation of ECB monetary policy. What they actually got was a cut in the deposit rate from -0.2% to -0.3% and not much else. The result was a 2% jump in the value of the euro. The ECB has hinted at a rather more dramatic easing move today but there is inevitably scepticism after December's letdown.

Another anticlimax would be likely to send the euro higher once again. Be aware, though, that a decisive policy move could knock it off its perch.