US rate hopes dashed

A dog, a dog, my budget for a dog

Researchers have discovered distinct differences between dog owners and cat owners. Of the two groups, dog owners have more friends and more money. George Osborne has a cat.

As he wrote yesterday's budget speech the chancellor must have been wishing he had a dog. In the event, Mr Osborne ended up on a sort of Robin Hood mission, taking from rich companies to give to poorer ones and slapping a sumptuary tax on the sugary drinks peddled by large corporations. Investors were not wholly impressed: on most fronts sterling came out of his speech lower than it had gone in. It had been a similar story with the UK employment data earlier in the day. Higher-than-expected wage inflation saw total earnings 2.1% higher on the year and unemployment was steady at a six-year low of 5.1% yet investors found nothing in the numbers to encourage them to buy the pound.

As a result, sterling spent another day at the rear of the pack. It fell by an average of -0.5% against the other dozen most actively-traded currencies, losing a third of a euro cent, half a yen and two Australian cents. The pound lost three and a half cents to Wednesday's leader, the NZ dollar, and its only gain was the cent it took from the US dollar.

Dotting the ayes

When the Federal Reserve publishes its monetary policy decisions it includes a chart that indicates, anonymously, where individual committee members would like to see interest rates in the future. Yesterday's chart showed less appetite for higher rates this year and provoked a lessened appetite for the US dollar.

The "dot plot" (so known because each member's preference appears as a dot) kicked into touch any remaining notion that there could be four rate increases this year. It appeared to point to just two hikes, and investors are far from convinced that the Fed will deliver even that. Those doubts cost the dollar a cent and a quarter against the pound and the euro. It was the day's weakest performer among the majors.

In the lead, the NZ dollar strengthened by 1.6% against sterling and by 2.4% against the US dollar. The US rate outlook was a big help to the Kiwi, as it was to the other commodity dollars, and the NZ dollar received extra assistance from figures that showed New Zealand's economy expanding by 0.9% in the fourth quarter of 2015.

More central bank action

The Bank of England, the Swiss National Band and Norway's Norges Bank will all make policy announcement today. Two of them are expected to leave their benchmark interest rates unchanged.

There is a general expectation that Norges Bank won't. Investors believe it will reduce its Sight Deposit Rate by 25 basis points to 0.5%. No move is expected from the SNB or the BoE.

Ecostats will be thin on the ground: Euroland inflation is just about all.