Daily Brief

Daily Brief

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Sterling hesitates

Unpopularity contest

The Canadian dollar had a worse day than the British pound but only by a narrow margin. Sterling spent most of the day on the retreat, eventually losing an average of 0.4% to the other major currencies. It lost exactly that much - either side of half a cent - to the US dollar and euro.

With a Conservative majority already priced into the pound, the concern of investors yesterday was that the evening's televised debate between Corbyn and Johnson would be more of a threat than an opportunity to the prime minister and, therefore, to sterling. An opinion poll held immediately after the programme split almost down the middle with a 51-49 verdict that Johnson was the stronger performer.

However, with neither man landing a point-scoring blow, even the partisan press found it difficult to big up their man. A more common approach among the unaligned mainstream media, notably The Independent and Sky News, was to style the debate as an unpopularity contest. Investors evidently thought so too. The next three weeks could be harder work for sterling than the last three. 

Nothing to chase

The antipodean dollars were Tuesday's top performers, while the Canadian dollar languished alongside sterling. Safe-havens went nowhere, with the yen and the franc almost unchanged on average. The economic data were either low-key, uncontroversial, or both.

Switzerland proved once again that a country does not need a weak currency to run a trade surplus. There was no surprise value in the announcement and the franc was unmoved. That was not the case for Italian industrial sales: they were an unexpected 1.6% lower on the year. Industrial orders made up for it by rising by an equally unexpected 0.3% over the same 12 months.

The CBI's Industrial Trends Survey went up by 11 points to -26 as order books improved from a nine-year low. "Looking ahead, firms anticipate output volumes to be flat in the next three months." US housing starts and building permits were both higher in October. Canadian manufacturing shipments fell 0.2% in September, less than expected.

FOMC minutes

Today's agenda is no more packed than Monday's or Tuesday's but it does at least contain a couple of significant items.

Westpac's leading index this morning showed "a slight improvement on the month" but "remains materially below trend". Japan's balance of trade swung into a modest surplus as imports fell much more quickly than exports. German producer prices fell 0.2% in October and were 0.6% lower on the year.

There is nothing else until after lunch, when Canada prints the consumer price index data for October. Inflation is forecast to be unchanged at 1.9%. At seven o'clock this evening the Federal Reserve publishes the minutes of its 29-30 October meeting. The general assumption is that they will point to a period of rate stability.

GBP: Investors unconvinced by election debate

GBP: Investors unconvinced by election debate

CAD: Manufacturing shipment no help to Loonie

CAD: Manufacturing shipment no help to Loonie

AUD: Rebounds despite soft leading indicator

AUD: Rebounds despite soft leading indicator

USD: FOMC minutes this evening

USD: FOMC minutes this evening

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