One thing after another
Judging by the modest net change in exchange rates - only 0.7% separated the leading NZ dollar from the lagging Greenback - Tuesday ought to have been an uneventful day. It would be wrong to draw that conclusion. A whole lot of things were going on: they just cancelled each other out.
Roughly in chronological order: the calming influence of White House economic advisor Gary Cohn appeared to take a trade war out of the equation; peace broke out in Korea; the EU postponed publication of its guidelines for post-Brexit trade with the UK; Donald Trump threatened sanctions on China; chancellor Philip Hammond punted for a financial services deal with Europe; a previously-dovish Fed governor spoke of higher rates coming more quickly; Gary Cohn announced his resignation; New Zealand beat England by five wickets.
The overall loser from this cocktail of chaos was the US dollar, which is down by a third of a cent. The winners were the yen, which made a late run on its safe-haven credentials, and the NZ dollar which managed to stay out of the ruck and delivered another baffling performance.
Swings and roundabouts
Early suspicion that the trade war could be called off was positive for the US dollar, as was Fed governor Lael Brainard's bullish speech about monetary policy. Speculation that North Korea might ditch its nuclear weapons knocked the dollar back, as did Mr Trump's escalation of trade tensions and Gary Cohn's resignation.
This win-some-lose-some toing and froing also affected sterling. Initially the focus was on a speech by Stefaan de Rynck, an advisor to EU negotiator Michel Barnier. He dismissed Theresa May's argument that a mutual recognition of standards would be enough to keep trade flowing freely. Later in the day Philip Hammond announced just what everybody had been waiting for: another speech about Brexit, which he will deliver today.
Economic data played no part in Tuesday's price action. Investors were too engrossed in the confused and evolving global political situation. Sterling came out of it roughly unchanged on average, down by a third of a euro cent and a third of a US cent to the good.
GDP and Brexit
It would be a triumph of hope over experience to expect the world to return to normal today. Donald Trump does, after all, still have his finger on the Twitter button. However, there are a couple of ordinary things on the agenda that might help to ease the tension.
Gross domestic product data showed Australia's economy expanding by 0.4% in the fourth quarter, a little less than expected. Euroland GDP comes out later this morning (0.6% growth, in theory) and Japan reports tonight (0.2% perhaps). The US trade deficit for January appears at lunchtime: under the circumstances it might attract more attention than usual.
Philip Hammond's Brexit speech might turn out to be just another shopping list of what Britain wants from the EU. Nevertheless, it could be important to sterling.