A nation of struggling shopkeepers
Sterling was not the only currency to jump out of its groove on Tuesday. The CAD improved from last place to first while the JPY gave up 0.6% to pick up an uncontested wooden spoon. The pound was all but unchanged on average, pocketing a quarter of a US cent and a third of a euro cent.
After five days alternating between first and last place the pound started well but lost its momentum at lunchtime. It was as if, after five days of hustling it back and forth, investors had bored of the game and gone off to find entertainment elsewhere. But that was easier said than done. Other than the yen, which took the Loonie’s place in the spotlight, major currency movements were almost as limited yesterday as they had been on Monday. At the ex-JPY extremes, the CAD strengthened by 0.2% and the USD was down 0.3%.
Even looking back over the past week the biggest moves have all been of less than 1% against the unchanged pound: The Northern Scandinavian crowns are both 0.7% softer and the USD is up by 0.8%. Sterling’s only chance to shine on Tuesday was the CBI’s Distributive Trades Survey and it fluffed it. The index fell ten points to -6% and the report told of employment in the retail sector falling “at the fastest rate since February 2009 in the year to August, with an even sharper decline anticipated in the year to September”.
Feeling pessimistic? Buy houses
A statistical paradox emerged on Tuesday from the United States. Consumer confidence fell to a six-year low while new home sales jumped to the highest level since 2006. Both changes were more extreme than analysts had predicted.
The Conference Board’s consumer confidence survey fell for a second consecutive month in August, dropping seven points to 84.8. “The percentage of consumers claiming business conditions are ‘good’ declined from 17.5% to 16.4%, while those claiming business conditions are “bad” increased from 38.9% to 43.6%.” There was also widespread concern about jobs, with one in four respondents believing they are “hard to get”.
Even so, plenty of them were happy to buy a house. New home sales scored a third consecutive double-digit monthly rise in July, up this time by 13.9%. The median selling price rose 7.2% from a year earlier to $330,600. The new-house boom results from a combination of low interest rates, a pandemic-driven demand for outdoor space and a limited supply of housing on the secondary market.
More of the same
If investors struggled to find inspiration among Tuesday’s economic data they will find it no easier to do so among today’s ecostats. The list is shorter and, with the possible exception of US durable goods orders, the statistics are less interesting.
The NZ trade figures released overnight showed a narrowing surplus as imports and exports both fell. Australian construction output was down by 0.7% in the second quarter, a much smaller decline than the forecast 5.8% fall. Norwegian unemployment increased from 4.6% to 5.2% and French consumer confidence was steady at 94 in August, having hardly budged since April.
The data later today cover South African inflation, Swiss business confidence and US durable goods orders. Orders are expected to have increased by 4.3% in July. Bank of England chief economist Andy Haldane will make an appearance this afternoon. Investors will be keen to hear whether he still foresees a V-shaped recovery, or if he believes it has already happened.