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FX Day Trading - 3 Mar 2010
Whoops, Who Did That?
Sterling Off the Hook
Services PMIs today
An inquiry into allegations of racial discrimination by the UK Border Agency in Cardiff was bound to turn up something weird but the truth turns out to be stranger than fiction.
Any staff member pathetic enough to allow an immigrant into Wales had to take temporary custody of a cuddly toy. It was not a reward, but a mark of derision to have the 'Grant Monkey' on one's desk for the day.
The inquiry has heard that the Grant Money has since left the Border Agency.
Could it perhaps have found new employment as the 'Sterling Monkey'?
If so, it will have swapped desks several time in the last 24 hours.
At such low levels it sticks in the throat to say sterling had a good day on Tuesday. However, after picking up the odd cent here, the odd half-yen there, Sterling by no means had a bad day in the currency markets.
As predicted, the construction purchasing managers' index slipped under the radar at 48.5, almost unchanged on the month. With no other UK data to trip it up, the pound spent the day in what can best be described as consolidation mode after several days of decline.
It will have been heartening to investors that an auction of £2 billion 30-year gilts (actually 29 1/2 year) attracted bids for nearly twice that much.
The last five auctions of 30-year stock have achieved an average of 1.63 times cover so, whatever misgivings they may have about sterling's short-term future, there is a degree of confidence out there that it will all come out in the wash.
(Of course, proponents of the Sterling Monkey doctrine will point out that this is exactly what happened to King John's treasure in 1216.)
The remainder of Tuesday's meagre crop of data had little bearing on the price of cod.
Euro zone producer prices (down by -1.0% on the year) and consumer prices (up +0.9%) suggested wider profit margins for manufacturers.
The Bank of Canada left its target for the overnight rate steady at 0.25% for an eleventh month. It was helpful to the Loonie that the BoC said in its statement that it will hold the current policy rate 'until the end of the second quarter of 2010'. Perhaps optimistically, investors took this as a promise that tightening will begin in June.
In the Pound-Dollar spreads market, Sterling received half a cent's worth of assistance overnight from a ten-point improvement in Nationwide's index of consumer confidence. It went up from 70 to 80 in February and it sounds even better if you say it rose by 14.3%.
The pound has since handed back those gains but it may be that London will look kindly on the figure.
Two other overnight releases showed Australian GDP growing by +0.9% in the fourth quarter, as expected, and German retail sales flat in January.
Euroland retail sales are not expected to match Germany's achievement but could come in slightly better than the forecast -0.3%.
In the States, ADP's employment change report will help analysts refine their predictions for Friday's non-farm payrolls number (currently -30k).
If investors are in a mood to care about ecostats today they will take most interest in the services sector PMIs.
The betting is that Britain will head the field with a slight uptick to 55.0, Euroland will take a pace back to 52.0 and the US will bring up the rear at 51.0, half a point down from a month ago.
Will anyone care? They might, but it is hard to imagine a fight for the Sterling Monkey.
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'FX Day Trading 3 Mar 2010', Article by Moneycorp, last update: 3-Mar-10
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