Morning quickie

Macro Man has had to fend off the gut reflext to short all things British this morning after a typically excruciating experience on public transport this morning.

The elephant in the financial market room today is of course the announcements from the BOE and ECB. Macro Man's long short sterling posiition (trying explaining the meaning of that phrase to a layman) is in jeapordy should the BOE hike unexpectedly; by the same token, he could get some relief should they stand pat. Today's decision will be based on next week's inflation report; given comments from Swervin' Mervyn last month, Macro Man holds out hope that the January shocker was pre-emptive rather than the start of something horrible. New of price cuts from utility suppliers should provide some comfort that a primary driver of inflation will ebb. In any event, should the BOE hike, prudence dictates that Macro Man sell out his short sterling position at best. Fingers crossed.

Meanwhile, we get to play our monthly game of 'spot the V-word' with Jean-Claude Trichet today. Markets are discounting that he will express the need for vigilance, thus pening the door for a March rate hike. Should he deliver, bunds should drift lower and perhap the euro will drift a bit higher. Should he fail to drop the V-bomb, however, expect a rally in European fixed income and a sell off in the EUR, perhaps down towards 1.29 against the dollar. It is probably a buy there, given the appetite of Voldemort and co. over recent weeks.

Speaking of which, the Russkies reval'ed the rouble by 10 kopecks today. At this juncture it is unclear how or if this will alter their intervention patterns in EUR/USD.

More later after the elephant performs his party piece....

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