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Events don’t have consequences

No drama

The US vice-presidential debate this morning was a welcome return to more civilised politics. Mike Pence and Kamala Harris made their points forcefully but politely, and neither attempted to drown out the other. The event was therefore slightly negative for the US dollar.

There were no earth-shaking revelations or promises from the candidates, just old-fashioned attacks on their opponents’ policies – real or imagined – and vigorous defence of their own. The most important outcome was arguably the validation of both Mr Pence and Ms Harris as plausible presidential substitutes, should their septuagenarian superior fail to see out his four-year term.

Over the 24 hours, the USD lost an average of 0.3% and gave up half a cent to sterling but the bulk of that move came during the morning. The dollar was not materially affected by the minutes of September’s Federal Open Market Committee meeting. Analysts interpret them as pointing to a reassessment of the Fed’s bond-buying programme at the next meeting on 4-5 November. The other factor not to affect the Greenback was the continued non-appearance of a long-awaited fiscal stimulus programme. As with Brexit, investors sort of expect some sort of vestigial agreement eventually.


A week to go

Although the Northern Scandinavian crowns headed the field on Wednesday, the Great British pound vied for third place with the AUD, CAD and EUR. There was nothing to choose between the four and they were just about unchanged on average against the other majors.

Two conflicting stories pulled sterling in opposite directions. One had it that the Prime Minister would abandon negotiations with the EU if the outline of a deal is not clear by 15 October. The other characterised the UK and EU as “lurching towards a deal”. European Council President Charles Michel said it was “time for the UK to put its cards on the table… The EU prefers a deal, but not at any cost”.

Yet another lack of reaction followed an interview given by European Central Bank President Christine Lagarde. She said, unsurprisingly, that monetary stimulus will continue until the Covid-19 crisis is over: “We should guard against the premature withdrawal of these support measures.”


Central banks, houses, trade, output

A treasure trove of data and central bank commentary awaits investors in the next 48 hours. This morning the Bank of England governor, the Swiss National Bank chairman and two top people from the ECB will be speaking. The Bank of Canada governor follows after lunch and the BoE chief economist appears tomorrow.

UK residential property is still in demand. The RICS House Price Balance rose to a long-term high of +61% in September, mirroring the story told by the Halifax about prices rising by an annual 7.3%. NZ business confidence saw another widespread improvement in October. Swiss unemployment was steady at 3.4%. Other data today cover Canadian housing starts and weekly US jobless claims.

Friday morning brings a slew of UK data for trade, output and gross domestic product. At lunchtime tomorrow, Canada reports on employment in September and the US Census Bureau reveals wholesale inventories for August.

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