European stocks climbed but the euro and pound sagged as markets readied for a triple dose of excitement – a European Central Bank (ECB) signal of its next moves, a British election, and testimony by the ex-FBI chief President Trump fired last month.
Much has been made of the "Triple Threat Thursday" but beyond the commentary on the outside risks from those events, it was hard to see any real trepidation in prices.
London's Financial Times Stock Exchange barely budged as British voters headed to the polls. Eurozone stocks rose as much as 0.6 percent as signs emerged of another bank rescue, this time in Italy, and data showed the bloc growing at its fastest since the ECB started printing money.
The central bank's latest meeting concluded with it reiterating that stimulus will remain unchanged until the end of the year, though it also tweaked its stance slightly to remove a reference to sub-zero rates potentially going lower.
Signs that a snap election in Italy was now looking less likely accelerated the rally in its stocks and bonds. Energy shares climbed, too, as oil recovered from a 5 percent drop the previous day.
After a solid start the pound and the euro both flagged. Sterling dipped 30 ticks to $1.2940 while the euro hit a day's low of $1.1220 on the ECB's comments, though that was just off a seven-month high.
The dollar was beginning to find some traction have spent most of the morning in a holding pattern. The yen had landed a glancing blow overnight after stimulus withdrawal talk from a Bank of Japan policymaker, but the greenback had all but recovered as focus returned to the day's main events.
Former FBI Director James Comey is currently being grilled by Washington politicians over his statement that President Trump asked him to drop an investigation of former national security adviser Michael Flynn as part of a probe into Russia's alleged meddling in the 2016 presidential election.
Although it keeps pressure on Mr. Trump, Wall Street markets largely shrugged it off after Wednesday's written testimony as not toxic enough to ratchet up the threat of an impeachment.
"To be honest, I'm absolutely staggered about the degree to which this geopolitical environment and developments are having absolutely no effect on markets," said John Hardy, Saxo Bank head of FX strategy.
"I'm old enough to remember how nervous the market used to get about this kind of stuff back in the day. I admit I don't know how to price it, but it's really staggering."
With the VIX implied volatility index, the markets' so called "fear gauge" hovering just above 10 percent, similar arguments are being made about the British election and Mario Draghi's ECB news conference.
Battle for Britain
For the ECB, soundings on downgraded inflation forecasts and background trepidation about banking sector stability make it highly unlikely it will conduct any major tightening of policy before the end of the year.
By tweaking its policy statement and dropping the easing bias on interest rates, it was a nod at the recent improvement in the eurozone economy. But by leaving the rest of it largely unchanged, it showed it is playing things safe.
As for Britain, for all the scenarios of a hung parliament or Labour-led coalition, the central assumption is for a slightly increased majority for the ruling Conservatives and averaging the very diverse opinion poll projections points to the same.
Spot sterling has been firm in recent days, although the jump in overnight implied volatility readings to some 30 percent – its highest since July – at least shows some pricing of possible risks over the next 24 hours.
The biggest moves of the week so far remain centered around ebbing energy prices and inflation outlooks in general.
Brent crude stabilized at $48.50 a barrel in European trading, after another steep drop briefly below $48 overnight. It is now down more than 7 percent year-on-year.
With inventories showing no easing of the global glut, an ongoing row between Qatar and its Arab neighbors is seen as undermining the Organization of of Petroleum Exporting Countries consensus about production cuts to limit oil supply.
Financially, the isolation of Qatar is taking its toll on the country’s debt and currency markets. Standard & Poor's downgraded Qatar's debt on Wednesday and Moody's warned on Thursday that it saw risks too if the situation continued.
The riyal currency held near to an 11-year low in its pegged band and though stocks bounced more than two percent, Qatari sovereign dollar bonds extended their losses, and the cost of insuring exposure to the kingdom's debt rose to the highest level since mid-November.
"We expect that economic growth will slow, not just through reduced regional trade, but as corporate profitability is damaged because regional demand is cut off, investment is hampered, and investment confidence wanes," Standard & Poor's said.