Narrow ranges were the order of the day
Narrow ranges were the order of the day – 11th January 2017
Trading yesterday was insipid. Narrow ranges were the order of the day and there was a three way tie for top spot (including Sterling) while two currencies tied for the wooden spoon. The main reason for the lack of action was the lack of economic data. The Norwegian Krone was one of those currencies at the bottom of the pile, losing 1.0% against Sterling, along 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. Sterling was up by a useful 0.5% however, it was not enough to get it back on an even keel from where it started the week (it is down by an average of 1.7% for the year to date). The US and Australian Dollars shared top spot with Sterling, not because of any particularly supportive economic evidence but for lack of any better idea.
The US National Federation of Independent Business Optimism Index is not a statistic that normally troubles investors (or falls off the tongue easily!). 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 as small business optimism was the most upbeat it has been 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 US Dollar. Mr Trump himself dismissed the claims, describing them as “FAKE NEWS – A TOTAL POLITICAL WITCH HUNT!”
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.