report from Bloomberg suggested that the country was reviewing its foreign exchange holdings, which could include re-evaluating its US Treasury bonds holdings amid a less attractive market and rising US-China trade tensions. The move by Chinese authorities has been seen as an attempt by the country to force US President Trump to soften his stance towards the implementation of trade sanctions with China, which analysts have warned could weigh on overall GDP this year in the world’s second largest economy. The report was, however, dismissed by China’s regulator.

President of the Federal Reserve Bank of New York and voting member on the FOMC William Dudley will be speaking this evening at 8:30pm London time. Aside from that, today we’ll have mostly second tier data out of the US ahead of Friday’s inflation and retail sales releases.

UK manufacturing activity rises to highest level in a decade

Sterling suffered from another fairly turbulent trading session on Wednesday. The UK currency slipped to a more than ten day low against the Dollar in the morning, despite the release of an impressive set of industrial and manufacturing production data, before recovering on the news out of China. The temporary sell-off was driven largely by a disappointing set of trade figures that showed the deficit swelled more than expected in November.

The sell-off in the Pound yesterday morning was still somewhat puzzling, considering the encouraging set of output data. Manufacturing production was especially pleasing, expanding at its fastest pace since early 2008 following the seventh consecutive month of gains in November. Output in the sector increased an additional 3.5% annually, while there was also a sharp upward revision to the October data. Industrial output was equally as encouraging. Production increased by another 2.5%, a faster pace than the 1.8% expansion economists had pencilled in.

Thursday looks set to be a data light day in the UK and we expect the Pound to take its cue from events elsewhere.

European Central Bank to release December meeting minutes

With no major announcements in the Euro-area whatsoever yesterday, the common currency was driven almost entirely by US Dollar moves. The currency briefly made a charge back above the 1.20 mark, before retracing in the afternoon to end the session only modestly higher than where it began it.

This afternoon’s ECB meeting accounts have the potential to shift the Euro when released just after midday. While it remains some way off, investors will be looking out for any language that could indicate members on the board are becoming increasingly confident that the central bank’s quantitative easing programme could be brought to an end later in the year.