Daily Brief

Daily Brief

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Sterling shaken but not stirred

Gyrations

On Friday, for the first time in a week, sterling was neither the strongest nor the weakest performer among the major currencies. On average it was unchanged and it was all but flat against the euro, the franc and the yen as well as the North American and antipodean dollars.

In the end, sterling's gyrations were to its benefit. Compared with a week ago it starts this Monday an average of 0.7% higher, matched only by the Swedish krona. The pound's gains include two thirds of a euro and US dollar cent, one Swiss cent and one and three quarter Japanese yen.

Investors did not pay undue attention to the Bank of England's Money and Credit statistics on Friday. They were uncontroversial, with consumer credit and personal loans ahead of forecast while mortgage approvals slipped. The real focus last week, and the factor behind sterling's alternate wins and losses, was on the general election opinion polls. They continued to show a lead for the Conservative party, and thus for the implementation of an EU withdrawal bill. The poll on Friday gave the Tories a 68-seat majority.

Unexciting numbers

The economic data on Thursday and Friday did not trouble the euro or the US dollar. Euroland's important numbers were close enough to forecast and there were no statistics of any consequence from the States.

Confidence readings from the European Commission were almost unchanged between October and November. Inflation in Germany was either 1.1% or 1.2%, according to the choice of measure. Headline inflation for pan-Euroland was 1.0% and unemployment in October was 7.5%, both in line with analysts' forecasts.

Canada reported that the country's gross domestic product expanded by 0.3% in the third quarter, equivalent to annualised growth of 1.3%. Increased business investment and consumer spending helped take annualised growth above the expected 1.2%.

PMIs and RBA

Mediocre numbers from Australia and NZ this morning were not enough to take the shine off Saturday's Chinese data. November's purchasing managers' index readings for services and manufacturing were both higher on the month and ahead of forecast at 54 and 50.2.

Two Australian manufacturing PMIs and one from Japan all sat within the sub-50 shrinkage zone. AiG saw a 3.5-point drop to 48.1. The Markit index for Australia ticked down from 50 to 49.9 while the equivalent measure for Japan was three ticks higher on the month, up from 48.6 to 48.9.

There are plenty more PMIs to come, from Europe this morning and North America after lunch. Most - including Britain's - are likely to be below 50 in the contraction zone. Analysts expect that only the Markit measures for France, Canada and the States will indicate expansion. Tonight the Reserve Bank of Australia will make a monetary policy announcement. The consensus is that the RBA will leave its Cash Rate benchmark unchanged at 0.75%: any surprise move would probably be to the downside.

GBP: Rollercoaster week leaves sterling ahead

GBP: Rollercoaster week leaves sterling ahead

SEK: In touch with pound

SEK: In touch with pound

EUR: Confidence measures steady

EUR: Confidence measures steady

CAD: Q3 growth beats forecast

CAD: Q3 growth beats forecast

CNY: Manufacturing picks up

CNY: Manufacturing picks up

AUD: No change expected from RBA

AUD: No change expected from RBA

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