Another positive UK ecostat

- Surprise increase in retail sales
- But it all went on petrol

It is not just in residential property and shares that bubbles inflate and burst. In successive years, A level exams yielded better and better results. This steady improvement was allegedly the result of increasingly diligent teachers and ever more intelligent and industrious students. The effect of this grade inflation was that universities which, 40 years ago, would have accepted a student with two Bs and a C, were demanding three A-stars. Yesterday that bubble burst. For the first time in a generation the percentage of candidates achieving A grades went down, leaving a quarter of a million students to plough through the UCAS clearing system in the hope of getting onto a fish management course at Doncaster.

It was Thursday's most exciting news. Well, the most exciting apart from a 0.3% monthly increase in UK retail sales. If a 0.3% rise does not sound much, that is because it isn't much. And the entire increase was the result of higher spending on fuel; sales excluding fuel were flat.  But never mind, the figures were much better than expected and sterling shared the joy. The pound jumped half a cent higher against the US dollar and the euro. 

Sterling has held onto its half-cent gain against the dollar and against almost every other major currency but by mid-morning it was heading lower against the euro. The euro - shadowed by the Swiss franc - was Thursday's success story. It strengthened by one yen and by three quarters of a US cent. Sterling starts this morning a quarter of a euro cent lower on the day.

It was not any fundamental data or news that took the euro higher. Investors could read nothing into a Euroland inflation rate unchanged at 2.4% and there were no other ecostats to consider. What got the euro going was the story about German Chancellor Angela Merkel, who is celebrating her return from holiday with a long weekend in Canada. She told reporters that ECB President Mario Draghi's plan to save the euro was "completely in line" with the mood of EU leaders and that "time is of the essence". 

Investors chose to focus on those sentiments and ignore the bit where the chancellor said "It is a question of taking the steps that weren't taken when the currency union was created, namely a political union." That was just as well for the euro, given the likelihood of an EU political union occurring during any given investor's lifetime.

Thursday's minor ecostats showed more US building permits but fewer housing starts, an increase in US weekly jobless claims, a four-point improvement in the Philadelphia Fed's manufacturing index and an unexpected -0.4% fall in Canadian manufacturing shipments. Overnight New Zealand reported a tightening of manufacturers' margins as costs went up by a quarterly 0.6% while factory gate prices only increased by 0.3%.

There are no data from the UK today and only the trade balance from Euroland. Canada reports on inflation and the University of Michigan releases its provisional index of consumer sentiment for August. Investors will be pushed to make much of any of those. It could be a quiet end to a quiet week. Have a good weekend.