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Taking a breather

Not enough

There was nothing at all wrong with Tuesday's UK employment data. Yet sterling was a net loser on the day, falling by an average of 0.3% against the other ten most actively-traded currencies. It was one of those instances of investors expecting the figures to be better than expected.

Jobseeker numbers increased by fewer than forecast; tick. The rate of unemployment was unchanged and on target at 4.0%; tick. Earnings both with and without bonuses increased by more than analysts had predicted: including bonuses they were up by an annual 2.6% while basic pay rose by 2.9%; tick. Oh, and Bank of England governor Mark Carney confirmed that he would stay on until January 2020; another box ticked for the pound.  

However, investors were not impressed enough to lend fresh support to sterling. Within half an hour it was down by a third of a US cent, which it was unable to recover. The pound also lost a (more valuable) third of a Swiss cent and gave up a dozen ticks to the euro. It looked as though investors had spent all of their available sterling optimism on Monday's story about a Brexit deal.

Motley crew

Three currencies shared the lead on Tuesday with 0.8% gains; the Canadian dollar, the Norwegian krone and the South African rand. Although it was possible to concoct vaguely plausible justifications for their success, the correlation between cause and effect was, at best, tenuous.

The price of oil went up by 3.4%. Canada and Norway are oil producers.  Therefore the Loonie and the krone went up as a result of the higher oil prices. That sounds alright until it becomes clear that the krone's rally began some seven hours before oil began to rise and the Canadian dollar's biggest upward move came six hours after oil took off. As for the rand, the popular angle is that it reacted to an unexpectedly strong 2.9% annual rise in South Africa's manufacturing production index. Except that the rand made most of its move in the hours ahead of the data announcement.

Faced with such conundrums, it is tempting to resort to that old traders' I-don't-know-but-I-can't-admit-it artifice: "More buyers than sellers". The likelihood is, though, that the Loonie gained some traction from optimism about a NAFTA deal, the krone did indeed benefit from the oil price looking bid and the rand just looked cheap, having fallen 12% in a month. 

A day off

Sterling gets the day off today with no UK ecostats to worry it. There are not so many from anywhere else either, at least until the early hours. None of the numbers during London's day has any obvious potential to get currencies moving.

Overnight Westpac's index of Australian consumer confidence fell three points to 100.5. Spanish inflation was steady at 2.2%. Euroland industrial production will not matter, but is forecast to have fallen by 0.5% in July.

Watch out for the Australian employment figures tonight: they almost always deliver a surprise.

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