Sterling on guard

Open sesame
Anyone nervous about the Chinese economy will take solace in the sales reported by retailers on Kuang-kun chieh, Singles Day, which takes place today. On-line retailer Alibaba, which shifted £4bn of goods on Singles Day 2013 and £6bn last year, has already exceeded those numbers in today's event.

This morning's official Chinese data told a similar story, with year-on-year retail sales up by 11% in October. Granted, the pace of growth in Chinese retail sales is not what it was five years ago, when they were increasing by 18% a year, but it has accelerated steadily in the last six months from the 10% reported in May. Less reassuring is the slowing rise of China's industrial production, which was up by 5.6% on the year. Five years ago output was rising by an annual 14% and, unlike retail sales, there is as yet no sign of an upturn.

Investors took the data in their stride, balancing the good with the not-so-good. There was little reaction by the Australian dollar, which is arguably the currency most sensitive to Chinese economic news. It is down by just a third of a cent on the day, -0.2% - against sterling and up by a tenth of a US cent.

And today's lucky winner is…
The accidental winner overnight was the NZ dollar, which added nearly a cent against sterling. Its success came despite an unusually cautious risk assessment by the Reserve Bank of New Zealand governor as he presented the Financial Stability Report.

Whilst Graeme Wheeler accepted that the financial system "continues to perform well", he drew attention to the risks posed by low dairy prices and the possibility of "a sharp downturn" in Auckland house prices. He also observed that "the last thing we would want to do is drive the exchange rate up".

None of this appeared calculated to endear investors to the Kiwi. Yet it edged higher after Mr Wheeler's speech, eventually booking a net 0.4% gain. That said, there was not much competition among the currencies yesterday: The "biggest" losers - the US dollar and the Swiss franc - were down by no more than half a cent.

Sterling in the firing line
The pound will be in the crosshairs today, if only because all the significant data and events relate to the United Kingdom. First up at 09:00 is the Bank of England governor, as he opens a conference in London. Shortly afterwards come the employment figures.

The topic of the BoE's Open Forum 2015, "Building real markets for the good of the people", is not an obvious vehicle for the governor's tortured thoughts on the future course of monetary policy. That does mean there will be no mention of the matter. The same goes for the ECB's Mario Draghi, who will be addressing the same audience at 13:15.

At 09:30 unemployment is expected to be unchanged at 5.4% with a small increase in jobseeker claims. Any disappointment could undermine sterling.