Listen to the Fed
Sterling still struggling
Friday was another difficult day for the pound. There was about as much appetite for it as there was for fifth-day test match tickets. Sterling did nothing wrong: Britain's trade deficit was actually smaller than expected. But investors' interest lay elsewhere and the pound only narrowly avoided the wooden spoon.
It was the Swedish krone that eventually found itself at the back of the field, just behind the pound, the Swiss franc and the Canadian dollar. Sterling did receive a little help from the UK trade figures, though not enough to get it going in any meaningful way. It fell by an average of -0.4% on the day against the other dozen most actively-traded currencies, losing one euro cent and a quarter of a US cent.
The NZ dollar was the accidental winner, adding two and a quarter cents against the pound, and the Aussie was not far behind with a cent-and-a-quarter gain. Both came under a bit of pressure this morning after China reported a continued fall in international trade (imports down by -8.3% on the year and exports down by -8.3%) and a -5.4% annual decline in producer prices.
Jobs and bailouts
The two hot topics on Friday were the US employment data and the progress said to have been made on Greece's negotiations with creditors regarding a third bailout. It turned out that investors were more impressed by Greece and the euro than they were by American jobs and the US dollar.
The euro added half a US cent despite a 215k monthly increase in nonfarm payrolls. Although, with upward revisions to the two previous months, the total number of people in work was 4k more than expected, the headline number was 10k short of forecast. Investors evidently found that off-putting and the dollar was unable to hold onto initial gains against the euro and the pound.
In Athens the word is that agreement will be reached tomorrow between the Greek government and its Quadriga of creditors. (The original Troika of EC, ECB and IMF has now been joined by the European Stability Mechanism, which did not exist at the time of Greece's last bailout.)
Dennis Lockhart speaks again
There was nothing in Friday's US employment numbers to deter the Federal Open Market Committee from raising its Funds Rate next month. Investors will therefore be hoping for a stronger steer in that direction when two senior Fed officials speak this afternoon.
Federal Reserve vice chairman Stanley Fisher will be interviewed on TV at 12:15 and Dennis Lockhart, the president of the Atlanta Fed, will have two bites at the cherry; first at 14:00 when he opens a conference and then at 17:25 when he delivers a speech. It was Mr Lockhart who set the September ball rolling last week.
Not much else will be going on today. This morning's data cover Swedish industrial production and orders, Norwegian inflation and Euroland investor confidence. There are no US ecostats.