Daily Brief

Daily Brief

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Happy Monday

Sterling, US and Canadian dollars share the top spot

Contrary to the litany of woe itemised here yesterday morning, investors went about their business on Monday apparently without a care in the world. The Brexit saga wasn't enough to prevent sterling jumping to the front of the field, while the US dollar was immune to trade war worries and impeachment drama. 

Another currency to disregard the fundamentals was the Canadian dollar. It shared the lead with the Greenback and the pound despite a 2.3% fall in the price of WTI crude. The broadly upbeat mood worked against the safe-haven Swiss franc, which lost almost a cent to sterling and was the day's biggest loser. The Japanese currency was less hard-hit, losing a third of a yen and matching the pace of the Australian and NZ dollars, which were on average unchanged against the other majors.

It can only be assumed that the day went as it did because there was no fresh bad news about trade, Brexit, war or anything else to stoke concern. There was even talk of a new Brexit deal, which the prime minister will supposedly reveal in the next few days. 

Data and rates

A pile of economic data gave investors plenty to ponder, though few of the figures were of international standard. The Reserve Bank of Australia made the widely-expected cut to its benchmark cash rate and managed to take investors by surprise with the tone of its statement.

The ecostats from Europe tended to miss rather than exceed analysts' forecasts. The 0.5% monthly increase in German retail sales fell short of the predicted 0.6%. Provisional inflation was way below target in Spain and Italy at 0.4% and Germany only managed 0.9%. The revised figures for second quarter gross domestic product confirmed that Britain's economy shrank by 0.2% in Q2.

This morning the Reserve Bank of Australia lowered its cash rate from 1% to 0.75% as expected. That was alright but the statement suggested that the RBA is readier than previously thought to make a further cut. The Aussie firmed up ahead of the announcement and fell afterwards.

PMIs to the fore

It being the first of the month, the data agenda will be comprised mostly of purchasing managers' index readings for manufacturing. The finalised Euroland inflation figures also come out this morning, followed by a speech from RBA governor Philip Lowe, which could shed more light on this morning's policy statement.

NZIER's Quarterly Survey of Business Opinion came out overnight. It showed that a net 35% of NZ companies "expect a worsening in general economic conditions – still the weakest level since March 2009". In the two manufacturing PMIs from Australia AiG and CBA, both came out with positive results at 54.7 and 50.3 respectively. Nationwide said this morning that UK house prices rose just 0.2% in the year to September and fell by that much over the month. 

Apart from Swiss retail sales, Euroland consumer prices, Canadian GDP and US construction spending, it is manufacturing PMIs pretty much all the way during the London day. There could be several sub-50 readings from Europe, with Britain pencilled in at 47.0.

GBP: Joint leader ignores Brexit concerns

GBP: Joint leader ignores Brexit concerns

USD: Joint leader ignores impeachment concerns

USD: Joint leader ignores impeachment concerns

CAD: Joint leader ignores lower oil prices

CAD: Joint leader ignores lower oil prices

CHF: Safe-haven not in demand

CHF: Safe-haven not in demand

AUD: Lower on RBA rate outlook

AUD: Lower on RBA rate outlook

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