Most of the economic data from Euroland either beat forecast, were an improvement on the previous month or both. Among the provisional purchasing managers’ index readings, which measure the vigour of the private sector, only French manufacturers reported any slowdown in growth. Germany’s economy expanded by 0.4% in the fourth quarter of last year, less than Britain’s upwardly-revised 0.7% but enough to make it the class leader for calendar 2016.
Investors struggled to find inspiration among the few US economic statistics. Provisional purchasing managers’ index readings came in below forecast and lower on the month. Existing home sales were reasonably strong but jobless claims increased by more than expected. It was left to the Federal Reserve to provide the guidance that was lacking elsewhere.
Whilst a handful of senior Fed people stoked the anticipation of three interest rate increases this year the minutes of the last policy meeting were characteristically non-committal about when the process might begin. It was not enough to bring in new dollar buyers: the Greenback lost a cent to the euro and half a cent to the pound.
Sterling had an eventful week, trailing the other major currencies on two days and leading them on three. The overall result was a weekly win for the pound, which added a net one and a half euro cents. The euro, meanwhile struggled at the back of the field accompanied by its boon companion, the Swiss franc. It lost one US cent despite all the positive ecostats, principally because of strong opinion poll showings by anti-euro candidates in Holland and France.
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