Daily Brief

Daily Brief

See recent articles

A bunch of losers

Hawkish Fed

The South African rand very generously saved sterling's face by taking last place on Wednesday, only just ahead of sterling though. At the head of the field USD narrowly beat the Australian dollar.

Easiest to explain is the rand's dip: it was profit-taking after three daily wins on the trot. The Aussie's success came after the Australian jobs data showed unemployment falling to 5.0%, its lowest level since 2012.  Investors focused on that number rather than the monthly addition of 5.6k jobs, which was fewer than forecast.  

The arguably hawkish minutes of September's Federal Open Market Committee meeting and the US dollar's success were not, as might be assumed, cause and effect. The dollar had done most of its work prior to the minutes' publication but it got a little more mileage out of the reassurance that interest rates will continue to rise. Overall it added three quarters of a cent against sterling and took three fifths of a cent off the euro. 

Bearish inflation

With no developments likely on the Brexit front, the pound only had to worry about the UK inflation data. And worry it might well have done. The consumer price index went up by 2.4% in the year to September, rather less than the 2.8% forecast by analysts. Investors had no alternative but to mark sterling down.

As noted on Wednesday, the link between today's inflation rate and tomorrow's Bank of England rate decision is currently, to all intents and purposes, inoperable. The total uncertainty about what Brexit will bring means that the bank must keep dry whatever powder it has left.  Nevertheless, it is traditional in the FX market to reward high or above-forecast rates of inflation and to chastise when they fall short. Hence the pound's lack of success yesterday.

The prime minister's visit to Brussels had zero effect on the pound.  Investors expected no positive result from her meeting with EU leaders and they were not disappointed.

Retail sales

Today's test for sterling comes with the UK retail sales data. Sales growth was ahead of forecast in the previous two months but a 0.4% decline is predicted for September. That leaves room for movement in either direction when the figures come out.

The rest of today's agenda is comprised of fairly dull stuff; US jobless claims and the Philadelphia Fed's manufacturing survey. Tonight's third quarter Chinese GDP numbers will be of much greater interest, as they will be the first data to cover the trade war period.

On Friday the focus will be on Canada and the Loonie. The data for Canadian retail sales and inflation will be a significant factor in the Bank of Canada's rate decision next Wednesday. For sterling the only statistic is public sector net borrowing. Bank of England governor Mark Carney will be making an appearance, as will a couple of Federal Reserve leaders.

GBP temporarily swaps Brexit risk for inflation sell-off

GBP temporarily swaps Brexit risk for inflation sell-off

ZAR comes last on profit-taking after three winning days

ZAR comes last on profit-taking after three winning days

AUD higher on six-year unemployment low

AUD higher on six-year unemployment low

CAD in focus today with retail sales and inflation data

CAD in focus today with retail sales and inflation data

USD heads the field, helped by hawkish FOMC minutes

USD heads the field, helped by hawkish FOMC minutes

Weekly roundup

Weekly roundup

Go to Weekly round up
Personal payments

Personal payments

With a personal account you can enjoy competitive exchange rates and low fees on all your payments.

Find out more
Foreign exchange business solutions

FX business solutions

We provide tailored services to help companies make global payments and manage their foreign exchange risk

Find out more
Travel money

Travel money

Order your travel money for branch collection or secure it on our explorer multi-currency Mastercard®

Find out more