Sterling gets lucky

Retail sales prompt dollar sales
The BBC's Price of Football survey reveals that the most expensive match-day ticket in the Emirates costs £97 while in New York it is a mere £27. Non-match-day tickets were not covered by the survey but are presumably cheaper. And it was very much a non-match-day for the dollar yesterday.

US retail sales for September were disappointing. Although they were up by 2.4% compared with the same month last year the monthly rise was a miserable 0.1%. Ignoring cars, sales were down by -0.3% on the month. Simultaneously with the retail sales numbers the producer price index, which tracks factory gate prices, was reported to have fallen by a monthly -0.5%, putting it -1.1% lower on the year.

There was nothing among the data to encourage the Federal Open Market Committee to raise interest rates when it meets in a fortnight's time. Investors came to the conclusion that an increase this month was even less likely, so they marked down the US dollar. It was Wednesday's weakest performer, falling by a cent against the euro and giving up two cents to sterling.

Jobs jump for sterling
The UK employment figures did not smash analysts' forecasts but they were there or thereabouts. Average earnings were up by an annual 3.0%, beating inflation by a handy 3.1%, and unemployment fell to 5.4%, its lowest level in more than seven years.

Sterling reacted positively, picking up two thirds of a euro cent and strengthening by an average of 0.3% against the other dozen most actively-traded currencies. Its only losses were to the antipodean dollars and the South African rand. All three benefited from the dampening of US interest rate expectations, the rand and the Kiwi going up by 1.0% while the Aussie scraped together a less impressive quarter-cent rise.

The Australian dollar was hampered by the less-than-inspiring employment figures that came out overnight. Whilst the 6.3% unemployment rate was a touch better than expected, the loss of 14k fulltime jobs and the -5k fall in overall employment were not. The Kiwi received a little help from the NZ purchasing managers' index, which improved from 55.1 to 55.4.

All American data
Except for Swedish unemployment and Norway's balance of trade there are no ecostats from Europe today. The highlight during the London session will be the US inflation data and tonight investors will be watching the inflation figures from New Zealand.

The US inflation reading will be doubly important following yesterday's retail sales numbers. After rising by 0.2% in the year to August there is every chance that consumer prices will be down by -0.2% in the year to September. Falling prices would be seen as another reason for investors not to hold their breath in anticipation of higher interest rates and, potentially, as another reason to reduce dollar holdings.

New Zealand's quarterly consumer price index is expected to show inflation slowing from 0.4% to 0.2%. Any lower number could hurt the Kiwi.