- China raises required reserve ratio by 50 bps
- Increase in ECB overnight borrowing facility is not due to a technical error. Is a sign that money market is still not fully working in some of its parts – Monetary source
- Ifo’s Sinn: ECB should not change rates “for the time being” as many European countries in deep trouble
- ECB’s Noyer: Wage deals must reflect fact that inflation largely due to commodity, energy prices, situation should stabilise
- UK January retail sales inc fuel +1.9% m/m, +5.3% y/y, much stronger than median forecasts +0.5%, +4.1% respectively. ONS says m/m and y/y comparisons affected by VAT change, heavy snow in January 2010 (y/y) and December 2010 (m/m)
- German January PPI +1.2% m/m, +5.7% y/y. Year on year rise strongest since October 2008
- French February manufacturing industry morale 106 vs 108 in January, weaker than median forecast 109
- Italian December industry orders s.a +5.4% m/m, unadj +17.4% y/y
- Canadian January CPI +0.3% m/m, +2.3% y/y versus median forecasts +0.1%, +2.4% y/y. USD/CAD hardly changed post release
Well I missed half the morning session, but I didn’t miss much when all said and done. We got a little excitement when China came out and signalled they had raised required reserve ratio 50 bps. EUR/USD dipped on the news but quickly recovered. Reports had buy orders down at 1.3540/60 and we rebounded from session low 1.3546.
At the end of the day, market had been a buzz with rumours of a China RRR move and as such it was fairly well discounted. And at the end of the day we’re talking RRR not rate hike.
Cable holding up ok. Sits presently at 1.6205. Underpinned by ongoing expectations of an early BOE rate hike. Market seems to have convinced itself another MPC member moved into the hawk camp at the latest meeting. Minutes next week will reveal all. Cable also supported by stronger than expected retail sales data (see above)
USD/JPY continues to be the currency pairing to trade if you’re in need of a good rest. Sits at 83.40.
