Perky pound, soggy Swissy
Sterling almost nailed it
There is a minor celebration today: the Coca-Cola bottle is 100 years old. Officially, its designers were inspired by the shape of a cocoa pod. More realistically, given the utter dissimilarity between the two, a more likely inspiration would be the coca leaf. But nobody was sniffing at the pound yesterday.
At least, if they were it was to show buying interest rather than disdain. If the FX market had closed when London finished for the day sterling would be top of the shop by a considerable margin. For reasons which will remain forever shrouded in mystery, investors decided they liked the look of an acceleration in UK core inflation from 1.0% to 1.1% and a zero-change in factory gate prices, despite most of the other measures falling short of forecast.
The result was a good day for the pound but, overnight, investors in America and the Far East were less enthusiastic. It would have been entirely reasonable of them to have scratched their heads and wondered what all the buying had been about. The net result was an incremental average gain for sterling which came mainly from the quarter of a US cent, the half a euro cent and the one Swiss cent it managed to hold onto.
"Flying" is used in the relative sense here: The NZ dollar's two-thirds-of-a-cent gain was in no way stratospheric but it was sufficient to put it at the front of the pack. At the rear, the Swiss franc's one-cent loss was big enough to make it the worst performer.
In mid-afternoon the Kiwi did come under pressure when the Global Dairy Trade Index printed a third consecutive fortnightly fall in milk prices, this time of -7.9%. However, because a decline of that size had been predicted by BNZ analysts the NZ dollar's dip was only a brief one. Thereafter it rebounded and moved higher throughout the night.
The inflation data from the States were almost all in line with forecast, the headline rate slightly higher at 0.2% and the core rate steady at 1.9%. There was minimal reaction from the dollar.
A matter of minutes
Just about the only item of any importance on today's agenda is the publication of the Federal Open Market Committee minutes at seven o'clock this evening. Investors are hoping they will provide a better steer on the likelihood of a US interest rate increase next month.
They might be disappointed: The discussion to which the minutes relate took place three weeks ago. A more up-to-date reading of the situation could come from the four regional Fed presidents who have speaking engagements this afternoon.
Today's ecostats cover euro zone construction output, Swiss business confidence, Canadian housing starts and US housing starts and building permits. Tonight brings NZ producer prices and Japan's balance of trade. There will also be an interest rate announcement from the Bank of Japan. It is expected to leave monetary policy unchanged.