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Talkin’ ‘bout Jackson

Accidental win for aimless pound (GBP)

Although there was a strong appetite for most equities on Wednesday, investors could not find the same enthusiasm for “risky” currencies. Or, indeed for any currencies. Separated by no more than a decent bid-offer spread, the pound (GBP) level-pegged in the lead with the AUD, NZD, SEK, NOK and, for good measure, the ZAR.

Some of the good cheer came from Washington, following the US House of Representatives’ (USD) earlier approval of Joe Biden’s $3.5 trillion infrastructure bill, but otherwise there was nothing obvious to lift investors’ spirits. The onward march of Covid vaccination successes is stumbling in some areas, not least the United States (USD): Delta Airlines will impose a $200-a-month healthcare surcharge on unvaccinated staff, and the new New York governor has admitted that Covid deaths in the state are 12k more than previously reported.

The lack of direction meant aimless exchange rates with almost random gains and losses. Having brought up the rear on Tuesday, the pound (GBP) shared the lead but did so with a total lack of passion. The Japanese yen (JPY) was 0.5% behind in last place, beaten by the USD, CHF and CAD which were 0.3% off sterling’s pace.

 

Confidence dented (EUR)

Confidence measures from Germany (EUR), Switzerland (CHF) and Britain (GBP) all delivered a degree of disappointment, as did the day’s very few hard economic data. However, none of them did any damage to the currencies concerned.

IFO’s business survey showed the Business Climate Index falling more than a point to 99.4 as “the mood in the German economy clouded over again”. Expectations were three and a half points lower at 97.5. ZEW’s assessment of Swiss business confidence (CHF) put expectations at -7.8, a 50-point drop. It was the first sub-zero reading since the pandemic-induced trough last March. In Britain (GBP), the CBI found services sector business optimism 54 points lower on the month at -17%. The gloom was largely the result of recruitment difficulties. To complete the losing hand, Gfk reported German consumer confidence (EUR) fading again at -1.2.

The only hard data came from the United States (USD). Durable goods orders fell 0.1% in July, held aloft only by military spending. Ex-defence, orders were down by a monthly 1.2%.

 

Not goin’ to Jackson (USD)

Every year since 1978 the Kansas City Federal Reserve has run an “Economic Policy Symposium” at Jackson Hole. This year’s meeting starts on Friday but Covid constraints mean it will be an online event. The programme will be announced tonight. The main event will be Fed Chairman Jerome Powell’s speech tomorrow.

In the shadow of Jackson Hole, the next two days’ data will be very much the supporting events. There is nothing of any consequence today from Europe, other than the account of the European Central Bank’s policy meeting. Most of the numbers come from the United States (USD); weekly jobless claims, the Kansas Fed’s manufacturing index and the revision to second quarter gross domestic product. Tonight’s numbers cover Australian consumer confidence and retail sales (AUD).

Friday’s European agenda is also a thin one. There are retail sales numbers from Norway (NOK) and Sweden (SEK), a GDP revision from Sweden (SEK) and confidence measures from France (EUR), Sweden (SEK) and Italy (EUR). After lunch there are US data (USD) for personal income and spending, wholesale inventories, the trade deficit and consumer confidence.

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