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Rogue elements

The Irish border conundrum

If sterling did not exactly have a good day on Monday, at least it did not have a bad one. The hair-tearing panic following Dominic Raab's empty-handed return from Brussels gave way to a mixture of quiet despair and gloomy resignation. On average the pound was just about unchanged against the other major currencies.

There are rather too many no-deal-Brexit predictions for comfort. The latest  of them come from the DUP and EU president Donald Tusk. This isn't just investors who are worried about the prospect; manufacturers such as Ford, AstraZeneca and Nissan foresee a possible need to relocate in the case of a hard Brexit.

So the tension continues. The next deadline is tomorrow evening's meeting of EU leaders, which was originally called to discuss the deal proposed by Michel Barnier and Theresa May. The assumption was that, by then, they would have agreed on a deal. According to the prime minister there is still a chance that they might but, to most onlookers, her optimism represents a triumph of hope over experience.

Rare movements

As well as being on average unchanged against the other majors, sterling was also flat - or nearly so - against the euro, the Swiss franc, the Canadian and Australian dollars and the Northern Scandinavian crowns.  The US dollar was a third of a cent ahead and level with the yen.

Disappointment at the below-forecast 0.1% monthly increase in US retail sales was compensated for by the 0.5% rise in the retail sales control group.  New Zealand's consumer price index for the third quarter put inflation at 1.9%, appreciably above the 1.7% consensus forecast. The Kiwi responded positively and it eventually added a cent and a third - 0.7% - on the day.

Canada's dollar  was looking slightly unwanted until the Bank of Canada published the Business Outlook Survey. The results were upbeat, leading investors to attach shorter odds to the possibility of a BoC rate hike next week. The Loonie did move higher when the survey came out but before long moved back into line, for a daily gain of a sixth of a US cent.

Jobs and wages

Expectations for today's UK data are modest. The only other moderately important statistics on the agenda are the ZEW surveys of German investor confidence.  

Analysts expect UK unemployment to have been unchanged at 4% in August, and that earnings will have risen by an annual 2.4% with, and 2.8% without bonuses. The usual rule here is the higher the wage rise, the perkier the pound. However, sterling's current situation militates against conspicuous celebration: there are too many investors ready to wipe the smile off its face.

The ZEW measures are likely to a slight fading of optimism among German investors. Also out today is the GTD index of dairy prices. Big changes in either direction can move the NZ Dollar but they have not done so in recent weeks.

GBP steady in no-deal Brexit's gloomy shadow

GBP steady in no-deal Brexit's gloomy shadow

USD flat against the JPY

USD flat against the JPY

CAD looks to possible rate hike next week

CAD looks to possible rate hike next week

NZD does well from inflation jump

NZD does well from inflation jump

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