Rand leads, yen lags

Sterling steady again

Retailer John Lewis has revealed the gifts requested by hopeful couples on their wedding lists. Nutribullets are popular, as are £3k TVs. Cutlery sets and napery have fallen from fashion, perhaps because young people nowadays eat takeaway food with their hands as they watch their huge TVs from the sofa.

Had they been watching the news yesterday evening they would have seen that sterling had another passable day in the FX market. It held roughly steady, on average, against the other dozen most actively-traded currencies. The pound outperformed the safe-havens, picking up half a euro cent, half a Swiss cent and a sizeable two Japanese yen.

Sterling achieved its neutral result despite a UK manufacturing sector purchasing managers' index that was not very good. At 50.8 the reading was the lowest in nearly three years, down by two points on the month and missing forecast by a point and a half. It was even beaten by the euro zone's 51.2. Yet investors seemed to have lost interest in bashing the pound, for it hardly flinched at the news.

GDP matters

Tuesday's top two were the South African rand and the Australian dollar. Both gained impetus from better-than-expected figures for fourth quarter economic expansion. Canada's dollar was handicapped by growth data which failed to impress. 

Canada's gross domestic product grew by an annualised 0.8% in Q4. The implicit quarterly growth of 0.2% was better than expected but still modest by current standards so the Loonie only improved by a cent, 0.6%. The Aussie strengthened by twice that, adding a net two and a quarter cents as a result of figures that showed Australian GDP expanding by 0.6% in Q4. Investors were particularly relieved that South African growth matched that of Australia. The rand added 36 cents for the day's top gain of 1.6%.

This morning Switzerland reported expansion of 0.4% in Q4, handsomely beating analysts' predictions. However, with the Swiss National Bank ready to intervene, the franc didn't budge. The data did prove, though, that a weak currency is not essential to economic success.

Central bankers on the podium

Economic statistics will be thin on the ground today. Helpfully filing the vacuum will be two members of the Bank of England's Monetary Policy Committee and one member of European Central Bank's Executive Board, all of whom have speaking engagements.

Ben Broadbent is the Old Lady's deputy governor for monetary policy and his colleague Jon Cunliffe is deputy governor for financial stability. Both will receive the careful attention of investors. Benoît Cœuré, François Hollande's representative at the ECB, finds it difficult to make a speech without citing exchange rates. If he does mention the euro he is unlikely to talk it up.

Today's ecostats include the UK construction PMI, Euroland producer prices and ADP's measure of employment change in the States. The Australian services sector PMI comes out tonight, followed by Australia's balance of trade and China's unofficial Caixin services sector PMI.