They love it, they love it not

Referendum anyone?
Bottom, top, top, bottom, top, bottom.  If the Oscar presenters can't get it right even when they have the answer written down for them, what chance would investors have had of calling sterling's position in the major currency rankings over the last few days?  Not a lot.

In an extraordinary run of erratic form that began ten days ago the pound did not once end up in the middle of the field.  On three (working) days it was in the lead and on the other three it brought up the rear.  On average the gains and losses just about balanced out: compared with its position on Friday morning 17 February sterling is down by an insignificant -0.1%.  It is two thirds of a cent lower against the US dollar and half a cent higher against the euro and the Swiss franc.

Except for some poor UK retail sales figures that sent it south more than a week ago the pound's gyrations had no concrete origins.  Its latest decline came early today, following a story in The Times headlined "Scotland to demand new referendum, No 10 fears".  Investors have developed a morbid fear of referendums, especially those which relate to Britain and the pound, so the prospect of yet another one did not fill them with delight.

Hurry up and wait
The US treasury secretary said in an interview at the weekend that his plans to reform taxation do not involve cuts to social security benefits, or "entitlements" as they are known across the pond.  He was vague, however, about what the plans do actually involve.

Investors initial enthusiasm for Trumponomics - corporate tax cuts and infrastructure investment - has faded somewhat over the weeks.  The measures have so far failed to appear and investors find it less easy to see the economic benefits of Mexican walls and travel bans.  

Steve Mnuchin said that Donald Trump will use his speech to Congress on Tuesday to set out his plans for middle class tax cuts, corporate tax cuts and a simplification of the taxation system.  However, investors seem to be preparing themselves for disappointment, especially with regard to timing: no move is likely before August at the earliest.

Durable goods lottery
The majority of the economic data that emerged on Thursday and Friday did not add much to the game.  It will be a similar story today.  The only important ecostat on the list is US durable goods orders.

On Friday the Loonie got a leg up from consumer price index figures that showed Canadian inflation accelerating from 1.5% to 2.1%.  The US dollar received no such help from the Michigan consumer sentiment index even though it came in above forecast at 96.3.

This morning the EC publishes its confidence indices and Fritz Zurbrugg of the Swiss National Bank makes a speech.  After lunch come durable goods orders for January.  A 1.9% increase is forecast.  So it won't be that.