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The word from Birmingham

USMCA still in focus

For most investors the focus on Monday was the US-Mexico-Canada Agreement (USMCA) that had been agreed late on Sunday night. The Canadian dollar continued to make headway, adding another third of a cent, but the Mexican peso did less well. A broadly risk-on mood helped commodity-oriented currencies more than the safe-havens.

For a second day the Loonie led the pack while the krona brought up the rear, hampered by a Swedish manufacturing purchasing managers' index that improved by less than expected. The gap between the two was less than 1% and the separation between the leading eight currencies amounted to no more than 0.5%. Big moves were not the order of the day.

For most currencies the manufacturing PMIs were the most obvious drivers.  Switzerland's 59.7 was one of the strongest readings but it did the franc little good: not only was it five points lower on the month, Swiss retail sales increased by less than forecast. America's ISM measure was highest at 59.8 but there, too, any positive impact was neutralised by the number being lower on the month and below forecast.

Oops

Sterling popped higher at lunchtime after Bloomberg reported a breakthrough in negotiations regarding the internal Irish border. It quickly dropped back when it became clear the report was not as newsworthy as first thought.

Even so, the pound had a positive day, strengthening by an average of 0.2%. It was unchanged against the US dollar and Japanese yen and 0.3% higher against the euro and Swissy. A stronger-than-expected UK manufacturing PMI helped, as did a rise in mortgage approvals.

A string of stories from the Conservative party conference did little more than muddy the waters. Brexit secretary Dominic Raab and chancellor Philip Hammond did more to itemise the problems than to offer concrete solutions. The prospect of a no-deal Brexit is not looking greater as a result of comments from Birmingham but investors are no wiser about what might take its place.

Dovish RBA

As expected, the Reserve Bank of Australia made no change to interest rates this morning and its statement offered no hint that an increase is in the pipeline. The statement knocked the Aussie back a little but it was still fractionally ahead on the day.

With talk of "gradual" and "sustainable" the RBA continued to allow investors to believe that the next interest rate increase might well not appear before this time next year. Whilst it effectively amounted to no change in market guidance, the reminder dented the Aussie slightly.

In the eye of the monthly PMI storm - manufacturing yesterday, services tomorrow - today's agenda is relatively thin. Britain's construction PMI will be of interest and the GDT index of milk prices has been known to affect the NZ dollar but there not much else until tonight's Australian services PMI.

USD level with sterling and yen

USD level with sterling and yen

CAD builds on USMCA gains

CAD builds on USMCA gains

GBP spikes on Irish border story

GBP spikes on Irish border story

On target but still missing the mark

On target but still missing the mark

AUD dampened by dovish Reserve Bank

AUD dampened by dovish Reserve Bank

SEK brings up the rear for second day

SEK brings up the rear for second day

CHF hindered by retail sales and PMI

CHF hindered by retail sales and PMI

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