Building a big, beautiful dollar
- US President Trump wants a big, beautiful dollar (or words to that effect). The dollar obligingly rallied strongly, back to levels not seen since lunchtime on Thursday. Of course, politicians do not directly determine the dollar's level. The widening current account deficit and a lack of new buying from central banks and the Middle East have brought the dollar to where it is today.
- US fourth quarter GDP data is released today. This data will be wrong (because first release data is always wrong). The margin of error with this data has grown in recent years. Nonetheless, the general story of an economy growing around trend should be confirmed. It is foolish to get excited about anything that happens after the decimal point.
- UK fourth quarter GDP data is also released. This is likely to be a bit below trend, although not that far below the likely post-referendum trend rate of growth.
- Japanese consumer price inflation rose a little less than expected, but offered few surprises. Producer price inflation (as a measure of corporate pricing power) remained steady. Consumers remain convinced that inflation is a lot higher than is reported.