Calm in Westminster
The national holiday in the United States did not create the pause for breath that investors had probably been hoping for. Equities continued lower in the Far East this morning, as did US bond yields. Although exchange rate ranges were not huge, volatility was very much the order of the day.
Sterling emerged from it all in fairly good order, averaging a 0.4% gain over the other major currencies. Its only loss was the 0.3% that it gave up to the krona, on the back of stronger than expected numbers for Swedish industrial production and manufacturing orders. It was just about flat against the euro, the Swissy and the yen and added a third of a US cent.
The second day of Commons debate on the EU withdrawal bill was quite civilised: the chamber was more than half empty, perhaps because the prime minister and the leader of the opposition left after PMQs. The release of much-trumpeted legal advice to the cabinet revealed little more than the prime minister had already set out. On the downside, the UK services sector purchasing managers' index looked sickly at 50.4 but investors were more concerned with the hard Brexit which continued to look less likely.
A risk-off attitude prevailed, harming the Commonwealth dollars and the rand which were down by an average of 0.9%. With the rand and the NZ dollar it was simply a matter of the general aversion to risk. For the Canadian and Australian dollars the issues were more specific.
The Canadian dollar dropped more than a cent when the Bank of Canada published its monetary policy decision. As expected, the overnight rate target was kept at 1.75% and the statement said it "will need to rise into a neutral range to achieve the inflation target". However, the language of the statement was less hawkish than investors had been expecting and the sense was that the BoC will not hurry to take rates higher. The Loonie was down by a net cent and three quarters, 1.1%, on the day.
The Aussie was as out of favour on Wednesday as it had been the previous day and it beat a steady retreat. Australian retail sales data this morning were a little better than forecast, with a monthly increase of 0.3%, but the trade surplus for October narrowed as exports rose 1% and imports jumped 3%. It matched the Loonie with a daily loss of 1.1%.
US jobs and Euroland GDP
The most important numbers come tomorrow, with the revision to euro zone growth in the third quarter and the monthly change in US nonfarm payrolls. Canadian and US central bank heads have speaking engagements today. There are no UK ecostats of any consequence.
Today brings the services PMIs from the States which were held up by yesterday's holiday. It could be an interesting day for the Canadian dollar, with balance of trade data and the Ivey PMI as well as an appearance by BoC governor Stephen Poloz.
Friday's highlights are euro zone GDP, which is expected to have expanded by 0.2% in Q3, and US nonfarm payrolls, where a monthly increase of around 200k is forecast. Canada also releases its employment figures tomorrow.