- UK growth downgrades worry the Pound
- US industrial production disappoints
- BOE due to announce 'no change'
Well a very Happy Saint Patrick's Day to one and all. I'll add a couple of stereotypical things for good measure. Top o' the morning to ya and begorrah to be sure. As you can deduce, I have no Irish blood anywhere in ancestry but, then again, neither will most of the people who will be spotted drinking Guinness, dying their hair green and accumulating tomorrow's hangover today.
Whilst today is celebrating St Patrick, it was George who ruled the roost yesterday. Not the Saint you understand; no this was George Osborne, the Chancellor of the Exchequer, who delivered his budget statement. The fiddling with tax tweaks and adding a sugar tax on drinks was overshadowed by the downgrade in Britain's growth prospects as seen by the Office for Budget Responsibility. It was a move from 2.5% to 2.2%, so UK growth is still expected to be at the top of the tress as far as global growth is concerned but not quite as healthy as previously thought. That is inevitable when you consider just how fraught things are across the globe.
That is highlighted by the Federal Reserve's decision to make really dovish comments at yesterday's meeting. They almost completely ruled out the rate hikes they had heralded in December and I doubt we will see any upward moves for the rest of the year. The US Dollar weakened against the Euro and the Pound on the news.
We also heard that the Norwegian central bank cut their base rate by 25 basis points to 0.5% this morning and we had similarly dovish activity from the European Central Bank recently. Central Bankers are all nervous about what the China’s slowdown and the commodity slump and the lack of demand will do to the global economy over the next year or so and currencies are following that same nervous pattern.
Today will bring the inevitable 'no change' decision from the Bank of England. How could they change rates when so much is looking so negative? What we are likely to get a cautious tone in the minutes from their meeting and Sterling has slipped again on the build up to that announcement. I suspect, as everyone is expecting the worst, Sterling will actually gain some strength this afternoon once the 'phew' is heard when the BOE doesn't actually do anything.
Yesterday's US industrial and manufacturing data was pretty dire. A 0.5% decline in industrial production was a tad worse than forecasts but manufacturing production posted a 0.2% gain and that does account for 75% of US output. The strong USD is causing problems for exporters though.
This morning brings EU inflation data but that is likely to show deflation yet again. The strengthened Euro and slumped raw material costs is at the background of this but the grotesque EU unemployment rate is causing all sorts of retail problems and discounting is also hampering any change of inflation.
And that is about it for today. I'll leave you get find the nearest theme pub with green Guinness to celebrate Saint Paddy. It is apparently the law.
Is she home?
A salesman knocks at a door and it is opened by a small boy.
"Hi," says the salesman with a beaming smile. "Is your mum at home?"
"Yes," says the boy and with that, he slams the door.
The frustrated salesman frowns and knocks again. Once again the small boy opens the door.
"Hello again," says the salesman. "You said your mum was at home. Before you slam the door again, can I speak with her?"
"Yes," says the boy and once again, he swings the door shut.
The salesman has really had enough at this point but he knocks again and when the door opens, he places his foot in the way so the boy can't slam it.
"What do you want now?" says the boy
"Well, you said your mum was at home and you said I could speak to her but then you slammed the door. So, can you just go and get your mum please?" said the salesman ushering the boy away down the hallway.
"I can't," says the boy. "She's not here."
"BUT YOU SAID SHE WAS HERE," exclaims the exasperated salesman.
"No," says the boy. "You asked if she was at home and she is....but this isn't my house."
FX Research by David Johnson
||E19: Trade balance sa, bn
||E19: Final HICP, % m/m (y/y)
||UK: BoE Bank rate decision, %
||UK: BoE asset purchase decision, £ bn
||UK: MPC minutes, Bank Rate vote
||US: Current account balance, $ bn
||US: Initial jobless claims, k (4wma)
Daily Currency Analysis with Alastair Sweetman