After the dovish talk from MPC members at the end of last week, yesterday's UK economic data did nothing to dispel the suspicion that the Bank of England could deliver a rate cut in two weeks' time. It might not yet be assumed, but the possibility cannot be written off.
With that in mind, sterling took last place on Monday, sharing that spot with the yen and the antipodean dollars. Although a problem shared is allegedly a problem halved, the pound could not escape the fact that it has fallen an average of 2% since the election, with losses of two euro cents and two and a quarter US cents.
Yesterday's UK data were not all horrid - nor even worse than forecast. But only close inspection could reveal the bright spots. The usual suspects, manufacturing and industrial production, looked good only in the context of recent German data. Manufacturing output fell 1.7% in November while the broader industrial production was down 1.2%. Gross domestic product shrank by 0.3% in November, but it did expand by 0.1% in the three months to November. The NIESR estimates that GDP stagnated in the final quarter of the year, far from a stellar result but better that the forecast 0.3% contraction.
With a trade agreement due to be signed by China and the United States tomorrow, the mood was at least theoretically upbeat. Share prices held up well but investors were unable or unwilling to transfer that enthusiasm to currencies. The Kiwi, the Aussie and the safe-haven yen all suffered equally.
There was an interesting announcement from the US treasury that it no longer considers China to be a "currency manipulator". China has apparently "made 'enforceable commitments' to refrain from devaluation and to share more information about its exchange rates". The "manipulator" tag had been a product of trade war politics and its removal was a necessary part of any trade deal. During the five months of its application the Chinese yuan strengthened by 2.3% against the dollar while the Japanese yen weakened by 4%.
Beyond the UK data, the only item of statistical note during the London session was the Bank of Canada's quarterly Business Outlook Survey. Although broadly optimistic, the report had no real impact on the Loonie, which is a third of a cent higher on the day.
With nothing at all on today's agenda from Europe or Britain the statistical highlight will be the consumer price index data from the United States. The most interesting numbers are already out.
NZ business confidence improved in the last quarter "with a smaller proportion of businesses expecting a worsening in general economic conditions". That optimism was offset by a sharp fall in building permits. Investors seemed not to be excited by either number. China's trade surplus was smaller than forecast in December as imports increased at almost twice the pace of exports.
US inflation is forecast to be 2.3% in the year to December, both for the headline rate and the "core" reading which ignores food and energy. At that level, it would have no particular implications for US interest rates.