I think we had three excellent rugby matches over the weekend, some disappointing cricket and more goals in the premiership football than you can shake a transfer deal at. You would normally use a stick for shaking at such things but transfer deals are so much bigger than any stick.

The upshot of last week was a series of pretty positive US data culminating in Friday’s positive employment report. The headline numbers from that report were that 36,000 jobs were created in January and the unemployment rate fell to just over 9%. That’s all good but the market expectation was higher on the job count, poor weather through January will undoubtedly have skewed the figures somewhat and the unemployment rate shifted more on a statistical adjustment in the base level than through any real life activity. No surprise then that the US Dollar didn’t rally significantly although it does remain strong this morning. This week is a bit light on US data so we may find the Dollar is adrift, buffeted by influences from elsewhere.

The Egyptian uprising is just such an event. The risk that instability in Egypt poses to the rest of the middle eastern and north African region is significant and that kind of geo-political risk is bound to cause some consternation amongst investors who generally take the path of least resistance and buy safe secure rock solid investments like government bonds in America, Japan, Switzerland etc. You’ll notice that in the value of these currencies.

In spite of this, the Euro remains rather better supported than it has a right to be - in my opinion. Sorry IMHO (in my humble opinion as people seem to put in blogs these days). Is there anything humble in assuming people know what your acronyms mean? I’m not sure but the fact is that the slightly more dovish tone of the European Central Bank’s rhetoric mirrors that of the US Federal Reserve and we expect little chance of an interest rate hike from either side of the Atlantic any time soon. The failure of the EU finance ministers to agree a reform of the Euro support package was disappointing but not unexpected. Today’s German Factory Orders data could well be very positive but that will just serve to exacerbate the argument over whether Germany can or should continue to be the sugar daddy to the rest of the Eurozone. I think the answer you would get from German voters compared to those in Ireland or Spain would be a little different.

The UK interest rate story could be a little different but the BOE would have to have a complete change of emphasis if it were to switch to an interest rate hiking plan before the 3rd quarter of the year. And that will be this week’s major news; the Bank of England’s interest rate decision. No change is forecast in either the base rate or the quantitative easing budget but bond traders believe we are approaching a time when UK interest rate will start to rise and, as mentioned above, the favourite guess is quarter 3.

The Australian Dollar is being hampered by the recent floods and storms in Queensland and now Western Australia is facing wildfires. These plus China’s state aim of slowing their economy and therefore their imports, are chipping away at Australian Dollar strength but the AUD remains pretty well supported due to its relatively robust economy and the allure of a 4.75% base rate. The release of poor December retail sales data won’t have helped the Aussie Dollar but the maths needed to extract the flood effects are so complex and entirely subjective so it may be we have to wait a month for the January numbers to get a clearer picture.
The week will be less crammed with data but no less volatile for it. The few choice morsels we do get to digest will keep even the most bored trader busy. Speeches from all manner of central bankers, retail, manufacturing and trade balance data from the UK as well as the Bank of England decision to flutter Sterling traders’ hearts, German inflation data and the Eurozone monthly bulletin to rattle the euro and just a smattering from America. That’ll leave the US Dollar to drift on external influences.

And if the currency markets aren’t exciting enough for you then there must be something else out there to keep you entertained. The Speakers wife, Sally Bercow seems to have reinvented herself as a giggling bimbette; such is the lure of ‘celebrity in exchange for dignity’ and the Top Gear presenters have decided that receiving complaints about racism is a new sport so they incite them by the bucket load. They should be lucky they didn’t mention rumours being spread by ‘jungle drums’. The Chair of one NHS watchdog in Wiltshire made the mistake of doing so and the accusation that her remark was racist caused tens of thousands of taxpayers’ pounds to be wasted on an enquiry.


Quote

“Tonight, the new Dodge Viper, which is the American equivalent of a sportscar... in the same way, I guess, that George Bush is the equivalent of a President.”
Jeremy Clarkson