Investors greet anti-no-deal push
A good-news-bad-news day on Tuesday was positive for sterling, negative for most equity markets and commodity-related currencies. At one end, the muddled messaging from the White House flipped back to trade talks with China being off; at the other, opposition parties in Britain met to draft an anti-no-deal-Brexit strategy.
After the US president dismissed at the end of last week the idea of reaching a trade deal with China, his more positive message at the weekend restored some confidence to financial markets. That evaporated again on Tuesday. Where it was difficult, if not impossible, to find a constructive media assessment of the situation, criticism was plentiful. The sense is that Trump's flip-flops have made things worse, making it more difficult to secure a trade deal even though by some measures "he already has achieved the bulk of US negotiating objectives". The US dollar is just about unchanged against the euro and Japanese yen.
The muddled thinking in Downing Street related to the Irish Backstop and the readiness or otherwise of Dublin to accept something less rigorous. Meanwhile down the road, Parliament's splintered anti-no-deal faction was trying to get its act together, with even the Archbishop of Canterbury offering his services as a negotiator. Investors were particularly taken with the apparent progress of a cross-party agreement to legislate against a no-deal departure. They rewarded sterling with a clear win on the day. It strengthened by an average of 0.7%, adding one yen and taking two thirds of a cent each off the US dollar and euro.
Tuesday's economic data provided little inspiration to investors. There were not many of them and those that were not mediocre were disappointing. The only excitement came from a piece by Bill Dudley encouraging the Fed to ignore Trump's demands on monetary policy.
Among the ecostats, the only ones of any importance were from the States. The Conference Board's index of consumer confidence "declined marginally" in August while still beating analysts' predictions. The Richmond Fed's manufacturing index also beat forecast, improving by 13 points to +1.
The erstwhile President of the New York Fed went in to bat with an essay calling upon his colleagues not to "enable" Trump to pursue a misguided trade war. The Fed officially rejected Mr Dudley's argument, insisting that "political considerations play absolutely no role".
However, his comments did not perhaps come as a complete surprise to chairman Jay Powell and his team.
German consumer confidence flat
It is sad but true that today's statistical highlight, German consumer confidence, has already been and gone. It was unchanged on the month. Also done and dusted is Australian construction output, which fell 3.8% in the second quarter. Construction work is down by 11% on the year.
European data this morning cover Swedish retail sales, Italian consumer and business confidence, Swiss business confidence and Euroland money supply. There are no UK data.
There is nothing from North America either, bar speeches from the Federal Reserve's Thomas Barkin and Mary Daly. NZ business confidence comes out tonight, followed by Japanese consumer confidence.