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Plenty of nothing

Politics not statistics

With an agenda entirely devoid of economic data and North America on holiday, it ought not to come as a surprise that exchange rates were not at their most mobile on Monday.  Broadly, commodity-related currencies moved lower and the rest of them went nowhere. Readers with a low boredom threshold may as well leave now.

In Britain the biggest economic story - now confirmed by the company - was that Honda will close its factory in Swindon, with the loss of up to 3,500 jobs. Inevitably, the immediate question was whom, or what, to blame for the decision. The consensus among the media is that Brexit is not at fault. It will not have helped, though, that days ahead of Britain's scheduled departure from the EU companies like Honda are completely in the dark about what the future holds. 

The biggest political story was the resignation of seven Labour MPs to form The Independent Group. It looks a lot like an embryonic political party and already has its own website and Wikipedia entry. Investors are uncertain what, if anything, are the implications for Brexit. The breakaways all support the idea of a second referendum but their collective position on other options is unclear.  

Euro's Praetfall

European Central Bank Chief economist yesterday joined colleagues who have already spoken about their readiness to ease monetary policy further if the slowing economy and low inflation make it appropriate. Mr Praet's idea was to adjust the bank's forward guidance.

The last official word on the matter was that euro interest rates would remain at their current low levels "at least through the summer". Mr Praet implied in his interview that a sharper slowdown could mean swapping "summer" for a later season.  After a profitable morning the euro retreated.

It did not retreat far though. On the day the euro is practically unchanged against the US and Canadian dollars, the Swiss franc, the Japanese yen, the Northern Scandinavian crowns and the British pound. The only real movers were the antipodean dollars and the South African rand, all of which are about 0.5% lower.

Significant uncertainties

Today's opening shot came from the Reserve Bank of Australia, with the minutes of this month's policy meeting. The takeaway for most of the media was the "significant uncertainties" to the economic outlook. Britain's contribution will be the jobs and earnings data this morning.

Economists predict that a net increase of around 12k jobseekers will leave the rate of unemployment unchanged at 4.0% and that average basic wages will have gone up by an annual 3.5%. With inflation last seen at 1.8% it would mean another increase in real earnings (wage rise minus inflation).

There are plenty of other data on today's list but none ore of high importance. Ahead of the UK employment figures come Swedish inflation, Italian industrial sales and Euroland current account. Afterwards there are German investor confidence, euro zone construction output and America's NAHB housing market index.

GBP unchanged against most major currencies

GBP unchanged against most major currencies

AUD worried by "significant uncertainties"

AUD worried by "significant uncertainties"

EUR held back by more ECB dovishness

EUR held back by more ECB dovishness

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