Professor Miles Hewstone, a New College psychology tutor, argues against the way Oxford University interviews candidates. He says questions like “This is a cactus, tell me about it” do not necessarily identify the best potential astrophysics students. Professor Hewstone reckons it would be fairer to employ a blindfolded boy or an octopus to make the final selections. The former works well for Egypt’s Coptic Church and the latter produced impressive results at the last football world cup. But perhaps the good professor is missing a trick: Hogwarts’ Sorting Hat is still out of a job.
Unlike the 155,000 people in America who found jobs in December. The increase in non-farm payrolls, reported on Friday afternoon, was a little larger than expected and the previous month’s figure was upwardly revised by 15k. The announcement marked a turning point for the US dollar, which had been strengthening since Congress fudged the fiscal cliff avoidance bill at the beginning of the year. The dollar’s reversal was assisted by a technical factor: Cable’s level at the time coincided with the low a month ago.
In a way it was a lucky escape for sterling. The pound had not been having a good day after the UK services sector purchasing managers’ index (PMI) came in at 48.9; more than a point lower on the month, a point and a half below forecast and back in the sub-fifty contraction zone for the first time in nearly two years.
Disappointing though it may have been, it was a better result than most of the euro area could offer. Germany’s 52.0 was alright (though still a touch short of expectations) but Euroland as a whole shot a 47.2 and Italy and France did even worse. As usual, the United States showed the way with a 56.1, a point higher on the month and two points ahead of forecast.
The American payrolls data neutralised what could have been another punchy day for the US dollar. The Australian and New Zealand dollars did best, helped not only by the employment numbers but also by the prospect of a Yen 12 trillion stimulus package in Japan. The pound was also lower against the other major currencies in the foreign exchange the euro, the franc, the yen, the Canadian dollar and the US dollar itself – but only by half a US cent or less.
There will be no repeat of Friday’s ecostat flood today. The Halifax house price index opened the batting with a 1.3% monthly increase, which ought to be moderately positive for the pound. This morning brings the Sentix index of Euroland investor confidence and the producer price index. After lunch comes Canada’s Ivey PMI. There are no other data announcements until tonight when Australia releases the AiG construction sector PMI and November’s balance of trade and the British Retail Consortium publishes its take on December retail sales.
There isn’t a lot to go for there, there are no real indication as to if people will be inclined to send money online. That could be a relief to investors who still haven’t worked out which way to jump in 2013.
Tariq Cena is an ex-investment banker who has also published many books on the world of finance. He is now a full time blogger, writer and financial consultant.