I wouldn’t want to be P Puff Diddly Daddly Diddy’s shoes (or whatever the American rapper calls himself these days). Joyce Wilson Turks, a 31 year old American mother is suing him for over a trillion dollars for a variety of reasons. He allegedly stole a casino chip of hers which was worth “10 zillion dollars” (an accurate quote) and according to Turk, he “went through Kim Porter and Rodney King and knocked down the WTC (World Trade Centre) and then they all came and knocked my children down. Set me up to be on disability and disabled my baby. He put my baby in a wheelchair". I am offering odds that the rapper wins.

Away from the gravitas of these serious legal arguments, yesterday’s three big data releases were all pretty upbeat so investors were understandably a bit bolder in their slide away from safe havens and into more lucrative investments away from the US Treasury, the Japanese Yen and the Swiss Franc. These currencies weakened as you have already gathered.

So the data showed a sharp rise in producer price inflation within the Eurozone. That should seep into higher retail prices eventually so it is highly significant at a time when the European Central Bank is already wrestling with high inflation and increasing growth but not wanting to risk unsettling the recovery with higher interest rates. Today’s interest rate decision from the ECB looks o be a foregone conclusion; no change is expected but the tone of the statement and press conference will have to reflect a month of improving manufacturing data and a slowdown in the decline in other figures. Will he be bold enough to suggest an imminent rise in interest rates? Nah, this is Jean Claude Trichet we are talking about here. Never has there been a more cautious man but we will still watch his comments with anticipation.

The second of yesterday’s big data releases was the upturn in UK construction sentiment as measured by the Purchasing Managers Index which popped up above the middle ground of 50, indicating potential for growth in the sector. Sterling had a very middling day with little discernable movement other than a slight increase against the US Dollar and the New Zealand Dollar.

The US Dollar was weakened by the flows of funds away from US assets and into higher yielding assets elsewhere and, perversely enough, it was positive US data that helped that flow. The ADP payroll report, a piece of data based largely on office hiring and firing was very positive. We knew that last month’s report showing a rise in employment of 297,000 was going to be revised downward and it was...by 50,000. That’s a pretty big margin of error really but the January figure was still well above market expectations and that may encourage traders ahead of Friday’s official employment report.

The New Zealand Dollar, unlike its Australian counterpart, was weaker on the day. Unemployment rose by 0.4% up to 6.8%. That’s a significant rise and it may delay any plans the Reserve Bank of New Zealand had for interest rate hikes.

The Aussie Dollar, by comparison, had a good day; Cyclone Yasi did a lot of damage but there appears to have been no loss of life. Good preparation is being praised for that. This morning’s strength in the Australian Dollar is being seen as a relief rally and I guess relief doesn’t come much greater than surviving 160mph winds but the data showing building approvals on the rise has also helped the Aussie Dollar.

And a quick word on the Canadian Dollar....it’s still strong. That’s about all that can be said of the Canadian Dollar. It reacts well to good US data because that indicates increased demand for Canadian exports and it reacts well to poor US data because that strengthens the US Dollar and drags the CAD with it. Anyone needing to buy CAD must be wondering what they have to do to get a good exchange rate. All you can do is use the market volatility and place 24 hour orders but choosing the position for those orders is the key.

And finally, I don’t know who funds this kind of research but there must be a fund to support research into the blindingly obvious. University of California researchers have discovered that holding a loved one’s hand or hugging them can decrease pain. So mothers saying ‘rub it better’ or ‘kiss it better’ or giving their children hugs for all these millennia weren’t wasting their time. Holding hands in times of stress works and thank goodness for that. Billions of teenagers will be glad that the embarrassment of having their mum or dad hug them in front of their friends wasn’t an entirely wasted trauma.


Quote

When you go into court you are putting your fate into the hands of twelve people who weren't smart enough to get out of jury duty.
Norm Crosby