No sense of urgency for currencies

- Higher inflation figure protects sterling
- Employment numbers and MPC minutes today

With the Olympics finished the media have had to become more creative with their content. Today they could have covered the $340m blackmail of a British bank in New York, or Sunderland City Council's policy of giving staff business class tickets to avoid infringing their human rights. Instead, as they seem to do every year, the papers chose to focus on the holiday garb of Britain's prime minister and his deputy. Both men were mocked for sporting the same clothes they have worn for the last decade. As for their choice of footwear they had no chance. Dave got it in the neck for wearing polished shoes while Cleggy was ridiculed for wearing sandals.

There was less opportunity to deride sterling than some had feared on Tuesday morning. Rather than undershooting the forecast 2.3%, the UK consumer price index went up by 2.6% in the year to July. At either level the rate of inflation is within its target range and therefore not an obstacle should the MPC wish to expand its stock of bonds. However, the attitude of investors is that some direct and arithmetic link exists between inflation and printing money. By that argument the higher CPI number meant a lower chance of further asset purchases, so it was positive for the pound.

Also on sterling's side (mostly) was the provisional figure for Euroland gross domestic product in the second quarter. Data released earlier by France and Germany had raised expectations that the eurozone might avoid negative growth in Q2 but it was not to be: the figure came in at -0.2%, exactly as forecast in the first place. It was one of those situations in which a statistic is expected to be better than expected and becomes a disappointment when it fails to meet the unwarranted optimism.

As if to rub in the point, ZEW's index of German economic sentiment fell from -19.6 to -25.5. The overall effect was to send the euro lower, though not by a whole lot and not against everything. A half-cent fall against the US dollar pulled sterling down by half that much, leaving sterling/euro to add a quarter of a cent. The Canadian dollar did well, helped by better-than-expected US retail sales in July, while the antipodean dollars edged lower. None of the moves was big or rapid.

The Assumption Day holiday will take continental Europe out of the equation today and there are thus no Euroland ecostats on the agenda. Earlier this morning Westpac's index of Australian consumer confidence fell by -2.5% to 96.6. At half past nine the Office for National Statistics releases the UK employment data for June/July, which are expected to show unemployment steady at 8.1% with 6k net new jobseekers. At the same time the Bank of England publishes the August MPC minutes. A raft of US figures after lunch covers CPI inflation, international investment flows, industrial production, capacity utilisation, the New York Fed's manufacturing index and the NAHB housing market index.

There is plenty on that list to keep investors busy all day but, for sterling, success or defeat will be decided in one shot by the employment numbers and the MPC minutes.