Daily Brief

Daily Brief

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Still winning

Charts and polls

Wednesday began in London with an attack on technical resistance at US$1.30. It was successful, and 45 minutes later Cable was half a cent higher. In the later part of the morning, it added another half-cent, eventually picking up one and a quarter US cents and winning on every front.

The positive mood towards sterling had been clear on Tuesday, when the pound narrowly failed to take first place. It was helped yesterday by the UK services sector's purchasing managers' index. At 49.3 it was more than half a point higher on the month and closer to the 50 breakeven level. Although it was still the weakest services PMI in Europe, the UK number was appreciably better than the forecast 48.6.

The political picture also favoured sterling. Opinion polls continue to indicate a working Conservative majority in the next Parliament and the visiting US president mostly avoided saying anything to align himself with the Prime Minister. Sterling's average daily gain was 0.7%: it added one euro cent and took a cent and a fifth from the Swiss franc and US dollar.

Trade deal on again

Having been advised by the US president on Tuesday that a China trade deal might not come until 2021, investors heard yesterday that a phase one agreement could happen as soon as next week. The safe-haven yen dropped to the back of the field, losing an average of 0.4%.

The latest story, then, is that an outline deal will be in place ahead of the scheduled tariff increases on 15 December and that they will not, therefore, happen. It was positive for the commodity-related currencies.

For the US dollar itself, it was not a great deal of help, and the Greenback had bigger worries later in the day. ISM's services PMI came in at 53.9, well short of October's 54.7 and the forecast 54.5. Although the corresponding Markit measure was on target and unchanged at 51.6, investors set more store by the longer-standing ISM measure.

A week to go

As some readers might have realised, there will be a UK general election next Thursday. The market view recently has been that a Conservative majority is likely and would be positive for the British economy and the pound. That view is subject to change in the next seven days and, with it, the value of sterling.

Events overnight sent the NZ and Australian dollars in opposite directions. The Kiwi strengthened after the RBNZ announced new bank capital requirements. The Aussie fell on news that retail sales stalled in October. Yet to come today are Euroland third quarter GDP and US factory orders.

Friday's highlights will be the US and Canadian employment data. Nonfarm payrolls in America are forecast to have gone up by 180k in November, beating the 167k monthly average increase for the year to date. Canada is expecting a net addition of 10k jobs for the same month. Other than Friday's Halifax house price index there are no UK economic data to trouble the pound ahead of the weekend.  

GBP: A comfortable lead

GBP: A comfortable lead

JPY: From hero to zero

JPY: From hero to zero

USD: Services PMI disappoints

USD: Services PMI disappoints

NZD: Helped by RBNZ capital decision

NZD: Helped by RBNZ capital decision

AUD: Hurt by slack retail sales

AUD: Hurt by slack retail sales

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