Kiwi downed

Cup-winner loses
Popular wisdom has it that international sporting success has a positive effect on the winner's economy and, by extension, its currency. The performance of the NZ dollar would appear to support that argument. Since the beginning of the world cup it has led the major currency field, strengthening by 5%.

But the Kiwi has not been looking quite so triumphant in recent days. As the victorious All Blacks paraded the Webb Ellis trophy in Auckland this morning the NZ dollar was waving goodbye to another three cents. In the last week it has been pushing hard for the wooden spoon. It was aided in its task by yesterday afternoon's news of a relapse in milk prices and by the NZ employment data released overnight.

A second successive decline in the fortnightly Global Dairy Trade price index, this time of -7.4%, did no serious damage but contributed to the existing lack of appetite for the Kiwi. The -0.4% quarterly fall in employment - the number of people with jobs - was a different matter. Employment had been expected to rise in Q3: its failure to do so cost the NZ dollar a swift cent and a half and helped take it -1.4% lower on the day.

Euro loses
For most of the other commodity-related currencies it was a good day. The Loonie came out on top, with the Aussie and the rand close on its heels. Higher commodity prices helped, as did oil, which saw a 3% increase. Meanwhile, the euro took a bit of a (relative) tumble.

The euro fell less than half as far as the NZ dollar, losing four fifths of a cent to sterling and a proportionally identical a four fifths of a US cent. That still left it as the day's second biggest loser. Contrary to expectations, the European Central Bank president used what was ostensibly a speech on Maltese culture to remind the world that the bank is "willing and able" to ease monetary policy further. 

There were no big gains for the other commodity currencies. The Canadian dollar's half-cent rally equated to 0.3% while the Australian dollar and South African rand managed just 0.2%. That would be no more than a rounding error in a busy market.

More losses?
Should Sig. Draghi be worried that his speech yesterday did not get the message across, he will have a second chance to tell the story this morning when he addresses a banking supervision forum. Alongside him will be five ECB board members, who might also want to have a go.

It is difficult to imagine anything that they could say to improve the euro's prospects. After all, depressing the single currency is part of their strategy to boost growth and inflation.

The main ecostat focus will be on the service sector purchasing managers' indices from around the world. Sterling's supporters will be hoping the UK analysts have got it right with their prediction of a one-point improvement to 54.5.