Ready to rip

A generally optimistic mood failed to benefit the commodity-related currencies, leaving the NZ dollar at the back of the field. The surprise winner – and it was a surprise – was sterling, with an average gain of 0.6%. Friday’s economic data were vaguely interesting but had little influence on exchange rates.

The prospect of continued low interest rates maintained the upward pressure on equity prices, with America’s S&P 500 index closing at a record high. That support did not extend to commodities and their related currencies. Oil was just about flat, as were the Canadian dollar (up 0.2%) and Norwegian krone (up 0.1%). The safe-haven Swiss franc and Japanese yen were level with the krone, suggesting that investors did not have much of a clue which way to jump.

Christopher Waller has remained almost entirely off the radar since he was appointed Governor of the Federal Reserve at the end of last year. He popped up on Friday in an interview with CNBC, saying “I think the economy is ready to rip”. However, for the avoidance of doubt, Mr Waller also made clear that he does not advocate tighter monetary policy as yet: “We’ve still got a long way to go. There’s no reason to be pulling the plug on our support till we’re really through this”. The USD was on average unchanged on the day. It was the weakest performer over the last week, falling an average of 0.9%.

Few data surprises

The economic statistics came and went without raising any eyebrows. The data were mostly decent, without being spectacular.

Eurozone inflation was exactly in line with forecast at 1.3%, its highest level since January last year. National inflation rates ranged from -2% in Greece to 2.5% in Luxembourg. Services, energy, alcohol and tobacco were the biggest risers. The US data mostly related to residential property. Housing starts and building permits were both strong, with starts up by 19.4% on the month. The Michigan index of consumer sentiment at 86.5 was the most upbeat since the pandemic took hold last March.

Data released overnight showed the NZ services sector growing at the fastest pace since July, with the performance of services index at 52.4. In Britain, Rightmove reported that asking prices for residential property reached a record high in a “buying frenzy”. New home sales in Australia soared in March as buyers hurried to collect the last of the government’s Home Builder subsidy.

And that’s it

The agenda for the rest of the day is almost empty.

Japan’s balance of trade and industrial production passed by unnoticed. The trade surplus widened and production was down by 2% on the year.

This morning the European Commission publishes the current account for February and Eurostat reports on construction output. Tonight, the People’s Bank of China is expected to leave interest rates unchanged and the Reserve Bank of Australia will publish the minutes of its last policy meeting. The UK employment figures appear early tomorrow