Jobs and Brexit
Another day sharing last place with the Aussie - and this time with the Kiwi too - cost the pound an average of 0.3%. If there is any consolation it is that the euro and Swiss franc were ahead by only the narrowest of margins. Sterling's problem was a mix of jobs and Brexit.
It is fashionable at the moment to look not at the rates of unemployment (3.8%) or employment (76.1%) but at the pace of earnings growth (3.2% gross, 3.3% ex-bonuses). None of the numbers in Tuesday's jobs report could with a straight face be described as bad: Unemployment is the lowest since the early seventies, employment is at its highest ever level and a 1.9% inflation rate means real incomes are increasing.
But they are not increasing by as much as the market had hoped: that 3.2% and 3.3% was 3.5% and 3.4% a month ago. Yesterday's numbers were not bad enough to send the pound lower but neither were they good enough to bring in new buyers. Anyway, many investors were distracted by Brexit - the apparent failure of Theresa May's cross-party talks, the possibility of her imminent resignation and the prospect of an I-can't-believe-it's-not-a-meaningful-vote on her withdrawal bill next month.
Game over, we win!
It was easier to pick, holes in the Euroland statistics, though investors did not go out of their way to do so. The euro lost less than a third of a cent to the US dollar and held steady against the safe-haven Swissy.
Only the most charitable investor could see the euro zone industrial production figures in a positive light simply because they were not as bad as forecast. Production fell 0.3% in March and was down by "only" 0.6% from the same month last year. ZEW's surveys of economic sentiment among investment managers were more straightforwardly unhelpful: in Germany sentiment fell five points to -2.1 while in pan-Euroland it was six points lower at -1.6.
The US numbers were almost all below forecast too, but most of them related to export and import prices, which attract little attention from investors. The US president did catch their interest briefly with his little thumbs: He tweeted a request that the Federal Reserve match the stimulus likely to be provided by the People's Bank of China. Were it to do so "it would be game over, we win!"
Data this morning showed slower growth for Chinese retail sales (7.2% YoY) and industrial production (up 5.4%). Sales growth was at a 16-year low. Gross domestic product in Germany expanded by 0.4% in the first quarter, in line with forecasts.
Other data from the euro zone today cover Italian industrial sales and pan-Euroland readings for employment and first quarter GDP, which is forecast to have expanded by 0.4%. There are also retail sales figures from South Africa and the United States.
After lunch the Canadian consumer price index data are expected to put headline inflation at 1.7% in April, down from 1.9%, and core inflation at 1.8%, up from 1.6% the previous month. The important and capricious Australian employment figures come out tonight.