Monday brought a batch of positive data from all corners of the world. The Eurozone inflation data kicked things off. This was the first estimate of January inflation and it came in at 2.4%; above the market consensus of 2.3%. As mentioned previously, it doesn’t mean the European Central Bank will start hiking interest rates because they have a lot of liquidity unwinding to do before that would have any appreciable effect but it is a positive for the Eurozone. However, the fact that the ECB can’t really act does mean the Euro weakened a tad on the day. Sterling managed to recover some of its recent losses and ended the day flirting with €1.17.

Other positive data included the Chicago Purchasing Managers Index; a business sentiment survey which posted its highest level since 1988. New orders, employment, inventories and prices paid are all measured and almost all elements of the survey were in the positive zone. We also had figures for US personal income and consumption and that too was a positive report. American’s, it seems, defied the poor weather and went to the malls. Income was up 0.4%, as forecast but expenditure rose 0.7%; well above expectations. US Dollar strength probably ought to be the market response but we have to remember that the US Dollar had been bought as a safe haven in the past few weeks so, as investors moved away from safety and into higher yielding assets elsewhere, the USD weakened on the day. The weakness in the USD and Euro flattered the Pound which rose right across the board and remains rather well supported this morning.

Overnight news that the Reserve Bank of Australia left its base interest rate on hold at 4.75% came as no real surprise but the RBA was very upbeat and that was a little unexpected. They say they will look beyond the immediate impact of the Queensland Floods and that, whilst this will cause a slowdown in the short term, they consider interest rates need to remain on hold for some time to come. The Governor said that they see inflation remaining within acceptable ranges for at least the next year. This is in contrast to higher inflation seen elsewhere but the Australian Dollar has been exceptionally strong, cutting the cost of imports. Whether Mr Stevens will be quite so relaxed if the Aussie Dollar weakens is open to debate. For now, Sterling is just about maintaining its hold on A$1.60.

Today is another big day for data with German and Eurozone wide unemployment figures, UK manufacturing and lending data and from the US we get manufacturing and construction figures. It looks set to be a lively one and we should be ready for surprises and upsets - yesterday taught us that.

I would imagine this is of little consequence to the Premiership football clubs who seem hell bent on losing money through lunatic levels of transfer fees. I am also sure none of this is important to Egyptians who are planning to get a million people on the street to demand the resignation of President Mubarak. Their actions, as laudable as they are, are also causing a great deal of uncertainty in other countries in the region and amongst western governments who have become used to dealing with Mubarak’s regime. Thankfully, the army says it will not fire on protesters. Let’s all keep our fingers crossed that this can all end without further loss of life.


Quote

A 'No' uttered from the deepest conviction is better than a 'Yes' merely uttered to please, or worse, to avoid trouble. Mohandas Gandhi