Deal or no deal?
They think she can do it
Investors have become very excited about the possibility that there could be a breakthrough in the stuttering talks between Britain and the EU. They believe that the alimony and the Irish border boxes are now ticked, leaving only the status of EU citizens to be agreed.
The Times newspaper was one of the organs suggesting yesterday that Britain's proposal to avoid a "hard" border in the island of Ireland has met with EU approval. The news followed Tuesday's story that Brussels had accepted Britain's offer of around €50bn for the divorce settlement. If those things are indeed true - and there has been no rush by Downing Street to confirm that they are - there remains just one more item to be settled before "sufficient progress" has been made to allow trade talks to begin.
Sterling had a stonking day on the back of the news, strengthening by an average of 1.0% against the other dozen most actively-traded currencies. Its smallest gain was three quarters of a euro cent; its biggest was three NZ cents, 1.5%.
The Kiwi's Achilles heel turned out to be ANZ's measures of business sentiment. Both were significantly softer on the month and cost the NZ dollar an immediate cent.
ANZ's Activity Outlook and Business Confidence surveys measure corporate hopes and fears in different ways but both cast light on how the private sector views the future. Last night's figures showed the Activity Outlook slowing from 22.2% in October to 6.5% this month while Business Confidence deteriorated from -10.1 to -39.3, an eight-year low.
Less remarkable, but of at least as much interest to investors, was the revision to US third quarter gross domestic product. On an annualised basis (for that is how the data are presented) the US economy expanded by 3.3% in Q3; more than the 3.2% forecast by analysts. However, on a quarter-on-quarter basis (as used in Europe and most other places) the difference between 0.8% and 0.82% was barely noticeable. The dollar weakened slightly on the news.
Waiting for news
Gfk's measure of UK consumer confidence, released overnight, was two points lower at -12. Investors didn't care. The only other UK statistics between now and the end of the week will are Nationwide house prices and the manufacturing sector purchasing managers' index. They probably won't care much about those either.
The manufacturing PMI is important and investors do sometimes react to it. However, the services PMI represents a far bigger part of the UK economy and that is not due until Tuesday. Moreover, investors' teeth are now firmly sunk into the Brexit negotiations story. They will be far more interested in that than they will be in the odd UK ecostat.
There will be plenty of economic data from elsewhere to provide light relief during breaks in the Brexit saga. The employment figures from Canada on Friday are arguably the most important; 10k new jobs are expected.