The (Daily) Mirror tells how Chancellor George Osborne’s driver dropped him off at a roadside burger joint then, artlessly, parked the car in a disabled bay to wait for his passenger’s return. A bystander took a picture of Mr Osborne getting back into the car and sent it to the paper, providing The Mirror with a wonderful opportunity to craft an article excoriating government policy. It talks of the “outrage” at the Chancellor’s failure to supervise his driver and uses it to blame him for everything from welfare cuts to that funny stain on the sofa.
The Mirror’s vituperation was lost on investors though. Their support for sterling on Thursday made it the joint top performer among the major currencies, in an uneasy partnership with the euro in foreign exchange provided by moneycorp. Sterling added one US cent, four and a half yen and around one and a half cents against the commodity dollars. It is unchanged against the euro and the Swiss franc.
The two things that could have gone wrong for sterling yesterday, but didn’t, were the services sector purchasing managers’ index (PMI) and the Monetary Policy Committee announcement. The latter made no mention of further asset purchases and the former was really quite good; at 52.4 it was half a point better on the month and a point and a half higher than the best Euroland reading, Germany’s 50.9 in Moneycorp international money transfers services.
Thursday’s biggest mover, by a long chalk was the tumbling Japanese yen. By the time London opened yesterday it had already fallen a fair way following the Bank of Japan’s decision to ramp up its asset purchase programme. Since that announcement the yen has lost 4% of its value and the loss is likely to increase over time as Japanese investors move more of their assets abroad.
There were high expectations for the European Central Bank president’s press conference yesterday afternoon and Mario Draghi did not disappoint. He said the Governing Council had had an “extensive” discussion about lowering the 0.75% Refinancing Rate and was considering “non-standard measures”, assumed to mean bond purchases. In the context of “downside risks” to the Euroland economy those comments sent the euro lower. It recovered when Sig. Draghi distanced himself from the Eurogroup president, who had said last week that the Cyprus bailout would provide the blueprint for future rescues. Of the decision to seize bank deposits, the ECB president said “that was not a smart move” and as for future bailouts, “Cyprus is no template”.
Things should be less hectic for the euro today but there are a couple of important ecostats; German factory orders and Euroland retail sales. There are no UK data. After lunch Canada and the United States both release their balance of trade and employment data. The change in US non-farm payrolls tops the bill. February’s 236k increase was the biggest for a year. The March number is expected to be close to the 191k average increase over the last three months. The usual rules apply; the nearer the number is to expectations, the less effect it will have on exchange rates. Have a good weekend.
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