Central banks centre stage

Wobbly antipodeans
Country Life, the high-end property magazine, lists 39 characteristics of a gentleman. Tattooed vegetarians with blow-dried hair who have worn lilac socks with sandals in Puerto Rico need not apply. Buying the Australian dollar does not improve a bloke's chances either, especially if he is a trader.

The Aussie was the biggest loser over the last 24 hours, giving up three cents to sterling and one and a quarter to the US dollar. It was looking a bit put-upon on Tuesday evening and properly came to grief overnight when the Australian Bureau of Statistics published the latest inflation data. The annual increase of the headline consumer price index figure was steady at 1.5% but the "RBA Trimmed Mean", the measure followed most closely by the Reserve Bank of Australia, slowed to 2.1%, its lowest reading in more than three years.

Investors decided to mark down the NZ dollar as well, believing that both the antipodeans are vulnerable to further monetary easing - interest rate cuts - by their respective central banks. The next opportunity for such a move comes tonight, when the RBNZ's governing committee decides whether or not to keep the Official Cash Rate at 2.75% (most analysts believe it will).

UK GDP misses the mark
The first estimate put third quarter UK economic growth at 0.5%. Investors had expected a figure of 0.6% so sterling dropped half a US cent on the news. The setback was a brief one though: on most fronts the pound gained ground, strengthening by an average of 0.3% on the day.

For a second day the Japanese currency led the way, drifting higher during the morning and stabilising after lunch for a net gain of one yen, 0.5%. The US dollar and the Swedish krona shared second place, advancing by 0.2% which, in the case of the dollar, was worth a quarter of a cent.

The dollar was helped by better-than-expected durable goods orders data. The -1.2% monthly fall in orders was way ahead of the forecast -3.0% decline. Investors were less impressed by the five-point deterioration in consumer confidence but it did not make them sell the dollar; they just stopped buying it.

With few ecostats to provide a distraction, investors' focus will be on the monetary policy announcements by the Federal Open Market Committee and the Reserve Bank of New Zealand. Neither is expected to alter its benchmark interest rate.

That is not to say there is no chance of a change to the Federal Funds Rate or the Official Cash Rate. The former could conceivably be raised today and the RBNZ could deliver a cut. Unhelpfully, both announcements come after London has finished for the day.

As for today's economic statistics, German consumer confidence is a couple of ticks softer on the month art 9.4 and German import prices fell by another -0.7% in September. That just leaves the US trade deficit, about which nobody is particularly fussed.