Sterling starts today in pole position against most currencies. This is owing both to poor releases from the US and Europe last week, and some knockout data from the UK. In particular, UK services, manufacturing and construction sectors bounced back in January according to data last week, following dire conditions over Christmas. This has buoyed the short-term UK outlook.
In the US meanwhile, conflicting data on Friday left the markets in a tizzy. Non-farm payroll figures showed that a measly 36k new jobs were created in January, compared to 121k in December. In the same instance, new figures showed that total unemployment dropped 0.5% to 9.0% last month. These mixed signals have left the markets unsure of the US outlook for the coming weeks.
The euro didn’t have an especially great Friday either. This is owing in part to remarks from ECB President Trichet that the European Central Bank is unlikely to raise interest rates in the near future. In addition though, an EU summit on Friday to hammer out a permanent EFSF rescue mechanism didn’t yield results. This leaves the outlook for the euro uncertain also.
Finally, there were some poor economic indicators on Friday from Oz too. The AiG Performance of Construction index found that construction floundered in January. This of course is because of the severe floods suffered in Australia last month, and doesn’t reflect the state of the Australian economy. However, it does mean the markets looked elsewhere on Friday.
It’s a pretty light day for data. German factory order numbers for January are due to be released at 11.00 GMT, while the latest US Consumer Credit figures are revealed tonight at 20.00 GMT.