A modest result for sterling

No wooden spoon

A fantastic weekend for British sport brought magnificent victories for Chris Froome at Bagnères-de-Luchon, Louis Hamilton at Silverstone, Andy Murray at Wimbledon and Lincoln City at Worksop. A passable weekend for Britain's pound left it fractionally higher, on average, against the other dozen most actively-traded currencies.

Although sterling lost out to the antipodean dollars and the South African rand it was higher against the other major currencies, strengthening by an average of 0.1%, an eighth of a US cent. Its achievement was not exactly the stuff of legend but for the pound at the moment any win, however narrow, is to be savoured. If nothing else it was proof that sterling can go up as well as down.

Whilst it would be an exaggeration to say the pound was helped by the UK economic data on Thursday and Friday, at least it was not hurt by their mediocrity. Manufacturing and industrial output both fell by -0.5% in May, beating forecasts that they would be down by -1%. Britain's trade deficit for the same month, -£9.9bn, was not as bad as expected.

Jobs and Abenomics

Friday's strong US employment data and this morning's decisive win for the Liberal Democrats in the election for the upper house of Japan's parliament were positive for investor sentiment. They were not helpful to the dollar or the yen though: both are down from Friday morning's levels.

The strong 287k increase in US nonfarm payrolls was just as much of a surprise as the previous month's weak and downwardly-revised 11k rise. The two numbers just about cancelled out one another, leaving the average for the last three months at 147k, somewhat below the 213k average last year. The payrolls number provided some reassurance that the US economy is still growing but was not seen as strong enough to provoke a rate hike by the Federal Reserve.

Shinzo Abe's electoral victory gave him the political clout he will need to push ahead with new economic stimulus. This morning he sketched out a ¥10tr package that will be finalised next month. Further monetary easing by the Bank of Japan is also on the cards. The yen weakened after Abe San's press conference.

Norwegian inflation

A sparsely-populated agenda contains nothing of major importance to the FX market. The numbers already announced in the Far East did not make much difference either.

Chinese inflation slowed slightly in June, from 2% to 1.9%. The figure was a tick higher than forecast. Japanese machinery orders fell by -1.4% in June: a 2.6% increase had been expected. A -1% fall in Australian mortgage lending in May was only half the predicted decline.

This morning's European ecostats cover Italian and Greek industrial production and Norwegian inflation. The only North American data are for Canadian housing starts. Tonight brings the British Retail Consortium's measure of UK retail sales for June as well as Japan's corporate goods price index and NAB's barometer of Australian business confidence.