Daily Brief

Daily Brief

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Modest moves

Nothing to bank on

A largely uneventful start to the week brought no market-moving economic data, no fresh news on Brexit and only a tiny adjustment to the US administration's trade war. The Norwegian krone led the way, thanks to monetary policy expectations, while sterling, the yen and the Loonie clustered at the rear.

In the early London session, there were a couple of spiky moves that took sterling lower, the euro higher and the yen lower, in that order. There were neither economic data nor news to explain the jumps, which apparently owed more to technical factors than to fundamentals. The euro and US dollar were eventually unchanged on the day against one another, 0.2% ahead of the pound and yen.

Euroland consumer prices were the only statistics of note. By most measures, inflation was lower than expected. Prices fell 0.5% between June and July, taking headline inflation down from 1.3% to 1.0%. The data sent the euro lower, but only after it had inexplicably moved higher ahead of the announcement.

The last hawk

Federal Reserve Bank of Boston President Eric Rosengren told a TV interviewer that he sees no reason for further rate cuts. Mr Rosengren was one of two Federal Open Market Committee members who voted three weeks ago against lowering the federal funds rate. His comments helped the US dollar.

Mr Rosengren pointed out that the job of the Fed is not to support share prices, even if they are threatened by fear of recession as short-term yields overtake long-term rates: "The goal of monetary policy is not to get the yield curve right, it's to get unemployment and inflation right". Tomorrow evening investors will find out more about the last FOMC meeting when the Fed publishes the minutes.

The minutes of the last Reserve Bank of Australia policy meeting came out this morning. They were much as expected and brought nothing new to the debate. "Members would consider a further easing of monetary policy" if the economic evidence were to show it to be necessary. As with most central banks (though not, perhaps, the Federal Reserve or the Bank of England), RBA policy is still data-driven.

Another quiet one

German producer prices were today's first ecostats. The annual increase of 1.0% was the smallest since 2016, down from 1.3% a month ago. Switzerland was second out of the traps, with a narrowing of the trade surplus in July as exports fell more quickly than imports.

Euro zone construction output for June comes next. Output in May was 2.0% higher on the year: analysts have not ventured a prediction for June. The only UK statistic is the CBI's Industrial Trends Survey for August. After a score of -34 in July, the figure today is expected to be a slightly better but still not positive -25.

Canada accounts for all of the North American data. Manufacturing shipments are expected to have fallen 1.8% in June and the Teranet House Price Index for July follows. The previous month it was up by 0.5% on the year. 

GBP: CBI order books today

GBP: CBI order books today

NOK: Leads on policy outlook

NOK: Leads on policy outlook

EUR: Inflation slows

EUR: Inflation slows

USD: Rosengren opposes easing

USD: Rosengren opposes easing

AUD: RBA - Further easing if necessary

AUD: RBA - Further easing if necessary

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