Monday’s data diary was a sparse one and that reflected in the lack of exchange rate momentum. Traders could be forgiven for keeping their powder dry as they awaited this morning’s UK inflation data. There is a lot of buzz around this release with many forecasters assuming the January figure will be well above the Bank of England’s 2% target at perhaps 4.4%. The BOE for its part has already said that the current inflation pressures are largely externally driven so there is no need to hike interest rates because it would have little impact. My mortgage says ‘thank you BOE’. However it will reignite the debate about just what the BOE’s remit is or should be. Anything above 4.2% should cause some Sterling strength but anything less than 4.0% may allow the Pound to slip back. If you have Sterling to buy or sell, you may want to take a risk-averse approach and trade before the announcement at 9:30 UK time or place an automated order in the hope that it may trigger around the time of the announcement.

Yesterday wasn’t entirely devoid of news; China’s inflation didn’t rise as fast as many had feared; 4.9% may sound alarming when the Bank of England is being chided for UK inflation getting up into the 3-4% area but it was below the 5.4% that most analysts were expecting and that is perhaps good news for the Chinese economy. However, the component parts of the basket of products used to calculate the inflation figure have changed substantially so we can’t read too much into the number. Opinions are mixed over what that does to the countries supplying China and the countries being supplied by China and it would take a much longer report than this to deal with all the potential ramifications but the initial response has been for Australian Dollar strength and little else.

Today’s other big releases include the economic growth data for many of the Eurozone states. Recent releases from Spain and Portugal have been mixed so, if the Euro is to improve, today’s German, French and Italian data will have to be positive and goodness only knows what we will get from Greece. Described in many circles as the weakest link, the Greek economy is clearly at the fragile end of the Eurozone spectrum. As with the Pound, if you are not a risk taker and you have Euros to trade, you might want to do something before the data which is due at 10:00 UK time.

The US trading session will also be awash with enough data to keep even the most bored trader happy. Retail and manufacturing figures are de for release although many will be a little stoic until they see the release of the minutes from the last Federal Reserve meting and those are not due for release until 19:00 (GMT) tomorrow.

Meanwhile, the New Zealand Dollar is still weaker after poor retail sales numbers and a report showing a sharp drop in interest rate expectations. As regular readers will know, the 3.0% base rate in NZ is one of the major incentives for international investors to buy the Kiwi Dollar, so if the interest rate hikes stop, the Kiwi Dollar may well decline.

And finally, Damien Hirst has a lot to answer for. A Brooklyn gallery is offering a bizarre course in taxidermy in which dead mice are reconfigured into odd looking miniature humans in odd poses. I hope to goodness it doesn’t catch on and I am glad I don’t have any pictures to offer you but I thought you would like to know what is going on in some sections of the ‘art’ world. Future classics maybe?


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I'd asked around 10 or 15 people for suggestions. Finally one lady friend asked the right question, 'Well, what do you love most?' That's how I started painting money.
Andy Warhol