Trump to face the press


Investors were not at their most decisive on Tuesday. That was clear from the narrow ranges and from the way three currencies shared first place while two others were in a dead heat for the wooden spoon. For the first time this week sterling was the (joint) winner.

A major reason for the indecision was the dearth of tradable data. For a while early in the London session investors amused themselves by pushing the Norwegian krone around after inflation figures showed consumer prices falling quite sharply in December. In the end they came to the conclusion that it was bad for the krone, which was one of the day's two losers and fell by -1.0% against the pound. It shared last place with the South African rand.

Sterling's success was a reaction to the previous two days' losses and was helped by the fact that senior politicians avoided stirring up the hard/soft Brexit debate. The pound is up by an average of 0.5%, a useful gain but one which has not made serious inroads into previous losses. It is still down by an average of -1.7% for the year to date. The US and Australian dollars shared top spot with the pound, not because of any particularly supportive economic evidence but for lack of any better idea.

US business optimism

The US National Federation of Independent Business Optimism Index is not a statistic that normally troubles investors. Yesterday, however, with little else to look at, they paid it more than the usual attention. Although it did not have much impact on the US dollar it was considerably more positive than expected.

The December survey of small businesses found them at their most upbeat in 12 years. In her statement the NFIB president said "We haven't seen numbers like this in a long time". Given the political complexion of small-business owners it looks as though they have been heartened by the Republicans' clean sweep of the two chambers of Congress and the White House.

Media reports linking Donald Trump to compromising information held by Vladimir Putin and his boys also had no discernable effect on the dollar. Mr Trump himself dismissed the claims, describing them as "FAKE NEWS - A TOTAL POLITICAL WITCH HUNT!" 

UK production

The statistical highlights for sterling today will be figures for industrial and manufacturing output in November. The previous month's data were dismal and analysts are looking for a rebound. This afternoon the Bank of England governor will be talking to parliament's Treasury Committee and Donald Trump will hold a press conference.

Investors expect UK industrial production to have increased by a monthly 0.8% with manufacturing up by 0.5%. This afternoon the NIESR will release its estimate of UK economic growth in the fourth quarter of 2016. Other data today cover South African business confidence and Greek inflation.

Mark Carney's appointment in Westminster is at quarter past two. Mr Trump's press conference is scheduled for four o'clock.