Daily Brief

All stop

Loonie winged  

Like a cheap traffic light the British pound’s entries for the last five days have been either green or red, never yellow. It was green on Monday, as sterling shared first place with a cast of thousands. There was nothing to choose between the GBP, EUR, CHF, AUD, SEK and NOK.

Nor was there much to distinguish the leading bunch from most of the rest of the field. The pound strengthened by an average of 0.1% against the other majors, a rounding error for all practical purposes, and it went up by that much against the US dollar; a sixth of a cent. Needless to say, excitement was in short supply.

The only currency on the move was the Canadian dollar, which gave up a cent to sterling and lost a third of a US cent for an average loss of 0.5%. Technical factors were at work with the Loonie. During London’s morning it matched a six-month high against the USD, from which it backed off and retreated to a one-week low. Some commentators attributed the move to a build-up of speculative short positions. However, as the CFTC position data come out on a Friday evening it is unlikely that investors would wait until Monday afternoon to react to what are, by definition, out-of-date statistics.


Two numbers

At a strategic level there were just two sets of data scheduled for Monday and one of them, South African unemployment, failed to appear. That just left the Chicago Fed’s National Activity Index in splendid isolation.

The Chicago Fed’s index was vaguely interesting, indicating “slower but still well above average growth in July.” It was not, however, enough to provide the framework of any serious trading strategy.

Even without any solid data upon which to base their actions, investors managed to be upbeat about almost everything. The mood was helped by the flow of anecdotal stories about Covid-19 vaccines and how soon they will be available. The optimism showed itself more in equities than in currencies.


Back to work

After a day of epic thumb-twiddling investors will be happy to see a more normal data flow today. Norway and Germany got things going with second quarter gross domestic product, revealing shrinkages of 5.1% and 9.7% respectively.

As London opens, Sweden will print the producer price numbers for July. Next come IFO’s measures of German business confidence. The morning winds up with the CBI’s Distributive Trades Survey of UK retail activity in August.

US residential property is the main topic after lunch, with house price indices from the Federal Housing Finance Agency and Standard and Poor’s as well as new home sales. At the same time as new home sales, the Richmond Fed releases its manufacturing index for August and the Conference Board prints its latest measure of US consumer confidence. Tonight the antipodean ecostats cover New Zealand’s balance of trade and Australian construction output.

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