Confidence returns, for now

Sterling debagged
There had been concern that the introduction of a plastic bag tax would lead to chaos and conflict at supermarket checkouts. It hasn't happened: Instead, sales have increased for live fish, axes, ginger and aspirin, with which a bag is supplied free. You don't get free bags with sterling though.

But there was another reason why investors held back from buying the pound on Monday. They were collectively unimpressed by the purchasing manager' index for the UK services sector, which came in at 53.3. Not only was it below forecast and two points lower on the month, it was beaten by the equivalent readings from Euroland and the United States.

The disappointing figure was costly for sterling. The pound fell half a cent against the euro and the US dollar. It quickly recovered the ground lost to the euro and the franc and, in the end, managed to strengthen slightly against them on the day. On most fronts, though, the pound stayed down. It lost an average of 0.5% to the other dozen most actively-traded currencies.

Safety last
A newly-positive attitude to risk made the commodity currencies Monday's undisputed winners and sent the safe-havens to the back of the field. The rand put in another strong run, narrowly beating the Australian dollar.

Share prices moved higher in the Far East on Monday morning, some of them spectacularly so. That enthusiasm rubbed off onto European and American markets. Nobody cared about the euro, the Swiss franc and the Japanese yen and all three had an even less enjoyable day than the pound, if only by a small margin.

The South African rand led the way, as it has on four of the last six days. Close behind was the Aussie, which jumped higher after the Reserve Bank of Australia kept its benchmark Cash Rate steady at 2%. The decision itself was not a surprise but investors had been half-expecting to see in the RBA statement a hint of future cuts: there was none and the Australian dollar strengthened by two and a half cents.

Pause for reflection
Unusually, Canada is the biggest contributor of economic statistics today with the Ivey purchasing managers' index and the trade figures for August. The rest of the world has even less to offer.

New Zealand opened the batting, reporting an apparently scary -14% quarterly decline in business confidence which did not trouble the NZ dollar. Investors showed just as little interest in a widening of Australia's trade deficit as imports increased by a monthly 1% while exports remained flat. German factory orders were down again in August, this time by a monthly -1.9%. And that was before Volkswagen went pop.

All that remains on today's ecostat list is Swiss inflation, America's balance of trade and the Global Dairy Trade index which is so important to the Kiwi dollar. There are speeches this evening from the ECB's Mario Draghi and two Federal Reserve presidents. And that's it.