Ivory trade

An ONS survey reveals that Britain's unhappiest folk are Wolverhampton residents in their forties and fifties. People there are also among the least satisfied with their lives. At the same time they are the least anxious, perhaps because they can't imagine things getting any worse. It must be a bit like that for sterling's supporters.

Following through Monday's rebound sterling had another reasonably good day yesterday, adding 0.4% on average against the other dozen most actively-traded currencies. It was just about unchanged against the US dollar, the euro and the Swiss franc. Investors were only briefly bothered by a fall of nearly three points in the UK construction sector purchasing managers' index. They initially marked sterling down but in less than an hour it was half a cent higher.

Sterling's near-zero net change against its peers should not be confused with stability. During the London session it changed direction five times, covering one-cent ranges against the euro and the US dollar. As EC president Donald Tusk put the finishing touches to the proposal which, he hopes, will keep Britain in the European Union, speculative guesswork pushed sterling this way and that. With Mr Tusk's proposal now in the open the pound has been steady to firmer overnight, suggesting that investors think it has legs.

Employment trumps spilt milk

A -7.4% fortnightly decline in global dairy prices had less impact on the Kiwi than might have been expected. Investors paid far more attention to the quarterly jobs data released last night, which put New Zealand unemployment at a seven-year low of 5.3%. 

The number of people employed in New Zealand went up by 0.9% in Q4 while the participation rate was a couple of ticks lower at 68.4%. Overall, investors liked the look of the figures and allowed the NZ dollar to take second place behind the yen for a daily gain of three quarters of a cent.

Australia's dollar suffered a setback on news of a wider trade deficit as imports fell by -1% and exports by five times that much in December. It recovered shortly afterwards when China's services sector PMI came in two points stronger than expected at 52.4.

PMIs and PMQs

Today's statistical agenda brings another dozen PMIs, mainly from the services sector. The UK reading will be important to sterling, as will the reception afforded by parliament and the media to the EU proposals agreed by the prime minister and Mr Tusk.

Analysts' forecasts put today's UK services PMI neck-and-neck at the head of the field with Spain and Germany. One of the two US measures might not be far behind. Other data today cover Italian inflation, Euroland retail sales and ADP's assessment of the monthly change in US employment. Norway's central bank makes a rate announcement at half past ten.

Questions to the Prime Minister at midday will inevitably centre on the EU reform proposals. Their effect on sterling will depend on the perceived likely success of those proposals.