Follow Paul Donovan

Testing times

  • North Korea has reminded the world of the difference between a phony currency war and a real war by conducting a quick nuclear test. South Korean markets reacted a little, but the implications to not seem to have gone beyond that.
  • Japanese consumer pessimism (the index has never, ever registered optimists outnumbering pessimists) actually lessened somewhat in January. Meanwhile Prime Minister Abe kept saying what the Bank of Japan could, should and must do.
  • The ECB's Weidmann seems to have misunderstood how to play a currency war, and shot himself in the foot by saying the Euro was not overvalued. Markets did not seem to be listening - at any rate there was no real move.
  • The Eurogroup is to discuss Cyprus at their 4 March get together - the terms of the bail out might worry markets if they are seen as setting precedents for other, larger economies that need bailing out. Swiss deflation (still negative) and UK inflation are on the data calendar.

Listen to the audio version of this briefing.