Daily Brief

Daily Brief

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TV duel tonight

Trade exhaustion

As suggested here yesterday morning, Monday was an unusually barren desert for economic statistics. Investors did what they could to make something of the political news - notably US trade and Britain's election - but the effect on exchange rates was far from spectacular.

Stop/go negotiations between Beijing and Washington continue to tell an incoherent story. One day a "phase one" agreement is imminent, the next the talk is of problems and objections from the other side. Both protagonists do their utmost to cultivate the impression that there is no hurry and they don't really care. The process has been going on for so long now that investors no longer react automatically to every twist and turn.

Yesterday the picture was as ambiguous as usual. Some in New York are optimistic about an agreement next month while others talk of pessimism in Beijing. For the dollar at the moment it is almost a zero-sum game. On Monday it lost a third of a cent to sterling and gained a seventh of a cent from the euro. On average it was unchanged against the other major currencies.

Political debate

The leaders of the Conservative, Labour and Liberal Democrat parties all turned up to the CBI conference on Monday to make their election pitch not only to the corporate bosses assembled there but, over their heads, to the electorate. Reactions to their contributions were understandably partisan.

The pro-Brexit prime minister lost points by backtracking on his pledge to cut corporation tax and for his Anglo Saxon dismissal of "business" last year. The pro-remain LibDem leader got either a warm or cool reception, according to the observer's point of view. The avowedly capitalist CBI's reaction to the pro-nationalisation Labour leader's plans was unsurprisingly "frosty".

When Corbyn and Johnson go head to head this evening on TV, investors will hear from the people most likely to lead the next government. While the Conservatives boast a commanding lead according to the polls, those with even short memories will be conscious that Theresa May looked set for a working majority two years ago.

Dovish RBA

The Reserve Bank of Australia minutes surprised investors with their dovish tone, taking the Aussie briefly lower. For the rest of the day there is a thin sprinkling of mostly minor-league ecostats and a couple of appearances by North American central bankers.

Today's RBA minutes revealed that the board considered a rate cut when it met earlier this month. There was surprise that lower rates had been considered, especially in view of the governor's comments following that meeting, when he gave the impression that he was not keen on further cuts. The Aussie is three quarters of a cent lower on the day, a slightly below-average performance.

European data this morning cover Switzerland's trade surplus, Italian industrial sales and orders, Euroland's construction output and current account and Britain's CBI industrial trends survey. After lunch, the States wheels out housing starts and building permits while Canada reports on manufacturing shipments.

GBP: Supported by election poll forecasts

GBP: Supported by election poll forecasts

USD: Trade picture remains confused

USD: Trade picture remains confused

AUD: Lower on dovish RBA minutes

AUD: Lower on dovish RBA minutes

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