Daily Brief

Bad weather, good data

Outbreak of good news

Wednesday’s economic data shared the love, if not in a perfectly even-handed way. The numbers from Britain and Australia might not have filled investors with joy but the news from North America was almost uniformly good. The USD, JPY and AUD contested the lead while the CHF struggled at the rear.

The real star was the United States. Just about every one of its economic statistics was higher on the month or better than forecast. Many ticked both boxes. For the US dollar, the effect was a steady rise against the euro through the European session, followed by an overnight plateau. The USD strengthened by two fifths of a cent against the GBP and took half a cent off the EUR. Unusually, it shared first place with the safe-haven JPY and, at the same time, the allegedly risky AUD, with the CAD not far behind.

Investors chose to look through what they see as the short-term negativity of severe winter weather that took southern electricity generators by surprise and cost 40% of US oil production. By the same token, they also paid less than the usual attention to a spike in oil prices, such that the Norwegian krone was left on the shelf.


US push

The good economic data from the States looked potentially longer-lived than the harsh weather. Retail sales, industrial production, producer prices and residential construction all delivered better than expected readings.

US retail sales were up by 5.3% on the month in January, dampened by vehicle sales. Exc. autos, sales went up by 5.9%. They were 7.4% higher than January last year. Industrial production is not among the most closely-watched statistics but the 0.9% monthly rise was almost twice as big as expected. Producer prices were 1.7% higher on the year, again nearly double the predicted figure. The NAHB Housing Market Index, a measure of current and anticipated residential property construction, was a point higher at 84. Although six points short of November’s high, it was still well above pre-pandemic levels.

The minutes of January’s Federal Open Market Committee meeting brought no surprises, simply confirming that the Fed intends to keep monetary policy relaxed for the foreseeable future. That is despite the FOMC seeing a “considerably stronger outlook for activity in 2021”.


Australian jobs; UK retail sales

The Australian employment data released this morning were roughly in line with forecast, so uncontroversial. Among the fairly long list of ecostats ahead of the weekend, the most important for sterling will be UK retail sales for January, which appear on Friday.

A swing from part-time to full-time employment and an increase of 30k Australian jobs did not thrill the Aussie but the numbers were decent enough. Swedish inflation and the European Central Bank’s policy meeting account come out this morning. After lunch, the North American data cover US housing starts and jobless claims, and Canadian employment change and new home prices. Later on the European Commission prints its consumer confidence measure.

Tonight Australia begins the round of provisional purchasing managers’ index releases, then reveals January’s retail sales. UK retail sales appear at 0700h on Friday morning, followed by a rush of European provisional PMIs. Canadian retail sales come out on Friday afternoon, together with the US PMIs and existing home sales.


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