Daily Brief

Daily Brief

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Waiting for a trade deal

Pining for news

There were  a lot of dogs not barking on Monday.  No new Brexit deal was revealed by Downing Street. Trump's tweet-generator was silent on the progress of trade negotiations with China. The Reserve Bank of Australia kept its benchmark rate steady at 1.5%. Sterling lost ground but was still the seven-day leader.

It was all a bit ho-hum. The safe-haven Japanese yen was the day's winner, with the Swiss franc and US dollar close behind. At the back of the field the Swedish krona was narrowly ahead of the Norwegian krone. There was not a great deal of rhyme or reason to most of it because there was very little hard data or news to provide direction.

Britain's construction PMI came in at a disappointing 49.5, missing the forecast 50.3, and the pound subsequently moved lower, for an average daily loss of 0.2%. But it did not feel like cause and effect: the construction PMI is not exactly a prime mover for sterling and a decline in building activity can hardly have come as a shock against the backdrop of winter and Brexit.  Overnight the BRC announced that sales in February were 0.1% down from the same month last year: no surprise there either.

Not doing deals

After several days of bold talk from the White House, mention of the trade talks with China was suddenly conspicuous by its absence. Having marched nearly 20% higher since Boxing Day, US equities decided they had had enough, prompting a rush of bids for the yen.

It looks now as though the US president is more anxious than Beijing to end the trade war. While his advisors want to go the whole ten yards with a comprehensive agreement, Trump is apparently ready to settle for a few shiploads of soya beans - or indeed anything he can show off to his core supporters. An announcement is said to be expected by the end of the month but that was not enough to keep things aloft yesterday. A markdown of US equities in early afternoon was matched almost precisely by a markup for the yen, which left it 0.6% higher on the day.  

In the middle of the field the Australian and NZ dollars were inseparable, both adding half a cent against sterling. The Reserve Bank of Australia's decision to keep its Cash Rate at 1.5% had been widely expected and governor Philip Lowe's statement contained nothing controversial.

Services PMIs

Today's hot topic is the services sector, with purchasing managers' index readings from all and sundry. The one from Britain is expected to be on the cusp at 50.0.

Australia opened the bidding with 44.5, a tiny improvement on the month.  Japan's 52.3 was more of an improvement but the Caixin reading from China was down by two and a half points at 51.1. In Europe sub-50 readings are expected from Italy and France, with pan-Euroland pencilled in at 52.3. The two US measures are expected to come in either side of 56.7.

Other data today and tonight cover Italian, South African and Australian gross domestic product, US new home sales and NZ milk prices. Central bankers from Switzerland, Britain, Australia and Japan will be making appearances.

GBP Lower after construction PMI disappoints

GBP Lower after construction PMI disappoints

NOK and SEK at the rear

NOK and SEK at the rear

JPY safe-haven soars as stocks sag

JPY safe-haven soars as stocks sag

AUD unmoved by RBA rate decision

AUD unmoved by RBA rate decision

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