Queen's speech

Dollar wins again
A proud owner was demonstrating the pedestrian-avoidance capability of his new Volvo. Unfortunately for the bystanders, a video clip of the event on Youtube makes it look as though he had mistakenly specified the pedestrian-seeking function when ordering the car. Next: the dollar-selling feature that doesn't work.

For a second day on Tuesday the US dollar was the top performer among the major currencies. It did not go far, picking up just half a cent against sterling, but it was enough to restrict the pound to second position with the euro, the Swiss franc and the Swedish krona close behind sharing third place on the podium.

The principle reason for the dollar's advance was a 0.5% rebound in US durable goods orders excluding transportation items. (The overall figure showed a -0.5% fall but that was simply because of strong orders for trains and boat and planes the previous month.) Most of the other US ecostats looked good too, including a faster pace of new home sales and improved consumer confidence. Two Federal Reserve worthies helped things along: Vice-chairman Stanley Fischer expects interest rates to head higher this year and Richmond Fed President does not rule out an increase in June.

The chasing group of currencies was also quite closely-bunched. There was little to choose between the Canadian dollar, the Japanese yen, the antipodean dollars, the Norwegian krone and the South African rand. 

They all fell by around -0.6% - approximately one and a quarter Canadian cents - against the pound. For the commodity dollars the biggest problem was that US durable goods orders figure: the Aussie, the Loonie and the Kiwi all lost more than half a cent on the news, the assumption being that it would encourage the Fed to move ahead with a tightening of monetary policy.

Sterling earned its silver with the CBI's Distributive Trades Survey, which compares the number of UK retailers reporting higher sales with those reporting declines. "60% said volumes were up on a year ago and 9% said they were down, giving a balance of 51%." It was the second strongest figure in four and a half years, beaten only by December's 61%.

A bit of a struggle
Investors will struggle for inspiration today. There are less than a handful of ecostats on the agenda and one of them, German consumer confidence, has already shown an incremental improvement from 10.1 to 10.2.

All that remains for the London session is French and Swedish consumer confidence and Sweden's balance of trade. Japan's retail sales numbers come out tonight. None of those will have any perceptible impact on the major currencies.

The only thing that might (but probably won't) is the Bank of Canada's interest rate decision and statement, scheduled for announcement at three o'clock. The BoC is fully-expected to keep its Target for the Overnight Rate at 0.75%, where it has been since January. So investors might as well watch the Queen's speech at 11:30.