Vaccines and skills
In third place, with an average gain of 0.1%, Tuesday was a decent day for sterling. It was, more to the point, a successful first quarter for the GBP. Two fifths of a cent behind the leading Canadian dollar, the pound picked up an average of 4.1%. It added one US cent and almost six and a half euro cents.
The euro-vaccine story took another unhelpful turn, precipitated by Germany. Health Minister Jens Spahn suspended the use of the Astrazeneca product on people under 60. To further complicate the situation, Canada has suspended the use of the vaccine on people under 55. Investors appear to have become inured to the minutiae of day-to-day vaccine ebbs and flows, though they remain conscious of the overall picture. The euro was just about unchanged on the day against the pound and Swiss franc.
Sterling meandered through the day on a vaguely upward track with nothing concrete to help or impede its progress. Bank of England Chief Economist Andy Haldane wrote a piece for this morning’s Guardian, in which he argues that throwing money at the Covid recovery will only be half of the solution: “the only way of immunising against economic long Covid will be through a skills programme every bit as large-scale, sure-footed and front-loaded.”
The Conference Board’s index of US consumer confidence “surged” more than 19 points to 109.7, its highest reading in a year. Confidence readings from the European Commission showed expectations “sharply improving”.
US confidence increased to its highest level since the onset of the pandemic last March, “an indication that economic growth is likely to strengthen further in the coming months”. European confidence improved “in all surveyed business sectors (i.e. industry, services, retail trade, and construction) and among consumers. The increases were of a magnitude not seen since last summer’s steep recovery following the first phase of the pandemic.”
The only negative note came from New Zealand this morning. ANZ’s Business Outlook reported business confidence falling 11 points in March to a net -4%. It was a worse result than trailed in the preliminary results because they “would not have captured the full lockdown impact”. The NZD was an average of 0.3% lower on the day and unchanged against the AUD. It lost half a cent to sterling.
The big event on today’s agenda is US President Joe Biden’s announcement of his infrastructure plan. The media variously estimate the size of it at between $2 trillion and $4 trillion. The trick for the president will be to couch the package in a way that achieves the greatest cross-party support.
Wednesday’s ecostats began with a strong rise in Australian building permits and buoyant Chinese PMIs for services (56.3) and manufacturing (51.9). Revised data for fourth quarter gross domestic product in Britain put Q4 growth at 1.3% and the contraction for 2020 as a whole at 7.3%. Nationwide said house prices fell 0.2% in March, leaving them 5.7% higher on the year.
This morning’s theme is inflation, with readings from France, Italy and the euro area. After lunch Canada reveals its first estimate of GDP for January and the US reports on pending home sales.