Daily Brief

Daily Brief

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Bluffs or ultimatums

Sentiment rules

It was all about sentiment on Wednesday. While the tabloids cooed over Archie the financial media agonised about a possible escalation of the Sino-American trade war tomorrow. There was optimism about the South African election and pessimism concerning Brexit. Little concrete evidence of any of it was to be seen.

The broad effect was a drift - by no means a flight - towards safety. The Japanese yen and US dollar, both safe-havens in their own way, were pipped to the post by the South African Rand (which most certainly isn't) while the Australian dollar brought up the rear, two fifths of a cent lower against the pound.

Sterling avoided last place only by dint of the Aussie's greater misfortune. It lost three fifths of a US cent, two fifths of a euro cent and three eighths of a yen. The pound is unchanged against the Northern Scandinavian crowns.  The losses came mostly during the morning as it became clearer that there is no easy path to a parliamentary agreement on Brexit.

No numbers

There was nothing among the economic data to set a direction. Housing market statistics from Britain and Canada were not enough and there were no numbers of any consequence from the euro zone or the States.

Halifax reported a strong 1.1% monthly rise for house prices in April. It was not sufficient to offset the previous month's 1.3% decline but it was more than analysts had predicted and the 5.0% annual increase was a positive surprise. The Halifax observed that prices had risen by an average of 4.3% per annum since their low point following the 2008 financial crash.  Overnight the RICS Housing Price Balance came in at -23%, unchanged between March and April.

Canadian housing starts increased by a seasonally-adjusted 22.6% in April. The Canada Mortgage and Housing Corporation portrayed it as a "strong recovery" in multi-unit construction activity.

UK growth and Canadian jobs

The highest-profile statistics in the coming two days are provisional first quarter gross domestic product for the UK and the Canadian employment report. Both come out tomorrow, together with US inflation.

Today's ecostats are not of a stature likely to get currencies moving.  Spanish industrial output is the sole Euroland contribution. America reports on producer prices and both of the North Americans reveal their trade figures for March. On Friday the GDP data will show whether pre-Brexit stockpiling helped the UK economy to pick up speed in the first quarter. US inflation is expected to have accelerated to 2.1% in April. Canadian unemployment is forecast to be unchanged at 5. 8%, with 10k new jobs

Potentially more important than any of those, the US administration will decide whether to pull the trigger on new protectionist import tariffs and there could well be new developments in the Brexit squabble. Where Brexit is predominantly a domestic affair, the US trade stance has global implications. 

GBP: Brexit nerves reappear

GBP: Brexit nerves reappear

ZAR: Leads, awaiting election result

ZAR: Leads, awaiting election result

JPY: Level with USD in second place

JPY: Level with USD in second place

AUD: Lumbered by China trade concerns

AUD: Lumbered by China trade concerns

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