Mario's big day

Easier interpretation

There was considerably less argument about what moved sterling on Wednesday than there had been the previous day. A combination of weak UK data and Brexit sabre-rattling put it at the back of the fleet for a second session.

Ambitions had not been high for UK manufacturing and industrial production in October: analysts reckoned manufacturing would have risen by 0.5% and the broader industrial output by 0.2%. But the figures turned out to be negative, at -0.9% and -1.3% respectively. Even the most ardent sterling bull would have been pushed to put a positive spin on numbers like those.

An average decline of -0.8% against the other dozen most actively-traded currencies included individual losses of two thirds of a euro cent, half a Swiss cent and one Japanese yen. In a reversal of Tuesday's pattern the pound's downward move happened mostly in the morning and it picked up after lunch.

In other news

The US dollar had almost as difficult a day as the pound, only beating sterling by the technicality of a dozen ticks. South Africa's Rand was the winner for a second consecutive day as the northern Scandinavian crowns fought it out with the Kiwi Dollar for second place.

The rand has done remarkably well in view of South Africa's weak economic performance in Q3. Some of that is because of the way investors buy the rand as a proxy for less-liquid emerging market currencies but a chunk of it is certainly due to ongoing relief that the country's credit rating was not downgraded to junk at the end of last week.

Since investors shrugged off any concerns about post-referendum Italy the euro has been on the advance. Yesterday they had in their sights the technical resistance around the US$1.08 level as they marked the Dollar lower against the euro. 

Extend and pretend

For longer than anyone can remember the European Central Bank has been printing €80bn a month and using it to purchase the bonds of countries and highly-rated companies. That programme is scheduled to end in March and the expectation is that the ECB will announce an extended timetable today.

The idea of an extension has been batted around for some while and if the ECB were not thinking along the same lines it would have surely said something by now to kill the idea. Because it has not done so the debate in the hours ahead of the ECB president's press conference surrounds what shape that extension will take.

A further €80bn per month for a set period after March would be one way to do it. Or perhaps a longer period at a tapered pace of, say €60bn a month. But the question on everyone's lips will be "what happens after that?". Any suggestion that the ECB has an end-date in mind, when money-printing will come to a complete stop, would be positive for the euro. It will be interesting to see how Mario Draghi handles it.