Having narrowly missed out on the wooden spoon on Monday, sterling grasped it eagerly with both hands yesterday. The UK employment data were perfectly respectable but the Brexit narrative was far from helpful. Even less constructive was an attempt to unseat Theresa May as Conservative party leader.
A 22k bump in jobseeker numbers did not affect the rate of unemployment, which was steady at 4.1%. There was good news on wages too: Both with and without bonuses, average earnings were up by 3.3% on the year. Unfortunately for sterling, investors were more concerned about Brexit uncertainties than they were with two-month-old data. No sooner had the positive figures emerged than the pound turned back from the day's highs.
It was not a catastrophic day: sterling was barely changed against the Swiss franc and down by just a fifth of a euro cent. But it lost an average of 0.5% against the other major currencies. The pound is also in last place for the week and the month, with average losses of 0.8% and 3.2% respectively. For good (bad?) measure, sterling is in bottom spot over the last three months (-3.9%) and six months (-2.8%) too.
Whilst Tuesday wasn’t a catastrophic day, today is certainly shaping up to be a day to forget for Theresa May. News coming out of Westminster indicates that at least 48 of the 315 Tory MPs have called for a vote of no confidence in the PM. They will need the support of 110 more of their colleagues to force out Theresa May. Whilst at first glance that looks unlikely, given the dangers of upending the status quo, one should keep a very close eye on the pound if they succeed.
In contrast to the uncertainty surrounding sterling, the broader mood on Tuesday was risk-positive. The South African rand rebounded into the top slot after three days in last place, the Canadian dollar was not far behind and the antipodean dollars competed for bronze.
The increased optimism had a lot to do with the US president's interview with Reuters. His comments were mostly positive: "We'll probably have another meeting" with the Chinese leadership; "We're having very good talks with the EU"; "In my opinion we are doing really well" with the economy; "I think Jay [Powell, the Federal Reserve chairman] is great".
Tuesday's economic data, such as they were, were also broadly helpful to risk-appetite. Investor confidence improved in Germany and Euroland. South African manufacturing was up by an annual 3.0%. US producer prices were up by 2.5% on the year.
The ecostats on today's list are, for one reason or another, all of low importance. The only significant scheduled event will be this evening's vote by Conservative party MPs on the future of prime minister Theresa May.
Overnight news of softer Australian consumer confidence and strongish Japanese machinery orders had little impact. As London opened South Africa's consumer price index put inflation a tick higher at 5.2%. Sweden is next up with its own CPI data, expected to reveal a slowdown in inflation from 2.3% to 2.0%. Other figures this morning cover Euroland industrial production and South African retail sales. US inflation this afternoon would have to be well off target to alter expectations for a rate hike next week.