·         Darling, Brown disagree on deficit, weakens sterling

·         Equity markets higher on first day of trade

·         UK manufacturing PMI better than expected, US good, EU poor

·         Commodity currencies tipped to continue higher

One of the problems we highlighted yesterday in our ‘Sterling Update: 2010 - The World First View’ was political discord: parties squabbling over the best way to fix the economy. What we missed however were failures of communication within one party.

Chancellor Alistair Darling spoke yesterday and seemed to assuage fears in the bond market by saying that any revenue from stronger than expected growth figures will be used to reduce debt levels. All good, and on their own, valid comments. However they were in a clattering opposition to Gordon Brown’s assertions given in a TV interview on Sunday. the PM is happier to allow this growth to keep public spending going.

Sterling weakened in the aftermath of Darlings’ comments on a fairly volatile days trade. The trading year is only 1 day old however and extrapolating the next 250 odd from yesterday’s is useless. What a lot of people I have spoken to over the past week or so are pleased about is that sterling did not take a bigger tumble over the Christmas a la last year.

Data from the UK was good yesterday with manufacturing PMI released at a better than expected 54.1. The US’s ISM was also strong but the European measure faltered close to stagnation.

If only we had something to mine. The 2 best performing currencies yesterday were the Canadian Dollar and the Norwegian Krone which were both boosted by rising commodity prices. These are many people’s tips for 2 the best performing currencies over ’10.

We continue the busy data calendar today with UK construction PMI (09.30 GMT), EU CPI (10.00) and US Factory Orders and Pending Home Sales (both 15.00)

You can also follow us live on Twitter at http://twitter.com/World_First

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