[Jordan Tilley]

Interest groups shower the Chancellor with ideas

- Yen perks up
- Deluge of data today

Good morning. The Daily Mail goes off-track this morning with a clumsy attempt to expose the "the soaring tax take" on petrol and diesel: "British motorists are shouldering the heaviest tax burden in the EU at the pumps, official figures reveal." Bizarrely, the headline of this ostensibly rabble-rousing piece underplays the situation: "British motorists pay up to 60% duty and VAT on petrol – the highest figure in the EU." Would it not have been more accurate (and incendiary) to say that duty and VAT together add 150% to the basic price? If not, then by the Daily Mail's logic, VAT is 16.7% of the price of a toaster.

Britain's chancellor is unlikely to rise to the bait. When he said at the weekend that "Britain has run out of money" he was paving the way for a Budget next month that is more likely to lean towards narrowing the spending gap than towards tax giveaways. Investors are not sure what to make of it. Whilst they appreciate fiscal probity they also like to see economic progress. Given the option of one or the other, they display no obvious consistency of choice. Look how the yen has held up (ignoring the current month) in the face of deflation and a shrinking Japanese economy. See how the US dollar has failed to prosper despite the best economic showing among major economies. Today the yen, the US dollar, the Canadian dollar and the euro are all less than 2% adrift from their values a year ago against sterling.

And most of them were going nowhere on Monday either. The US dollar, the euro and the pound are all within quarter of a cent of yesterday's opening levels. The yen is about one yen firmer, apparently because of buying by exporters.* Firmer equity prices helped the Canadian, Australian and New Zealand dollars to add a cent during the afternoon.

Figures released in the last 24 hours covered a 2% monthly rise in US pending home sales, a 4.1% increase in Japanese retail trade and an almost-steady 6.0 for the Gfk index of German consumer confidence.

Coming out this morning are the Eurostat indices for consumer, economic and industrial confidence and the CBI's survey of UK retail sales. After lunch Germany releases the provisional inflation figure for February. The United States publishes durable goods orders, the Case-Shiller house price index, the Conference Board's consumer confidence index and the Richmond Fed manufacturing index. Tonight come New Zealand building permits, Japanese industrial production, Australian new home sales and retail sales and Gfk's index of UK consumer confidence.

That agenda is the busiest for more than a week. It would be a surprise if the deluge of data were not to rattle the currency cage and get things moving.

*Japanese industry groups often act together in the FX market. In the current situation, exporters appear to have agreed that downward pressure on the yen earlier this month was overdone and that it offered a good opportunity to repatriate revenues. The idea of collective action is to prevent any one firm standing out as cleverer or more stupid than its peer group in its FX timing.