Indian summer

Sterling keeps up
There is perennial debate about when summer becomes autumn. Some say it starts on 1 September. Others insist the autumnal equinox is the dividing line - this year 22 September. For sterling it began on 24 June but now the pound seems to be enjoying a bit of an Indian summer.

It is symptomatic of the dilemma facing investors that the British cabinet met only yesterday for its first serious discussion of Brexit. Following the referendum it took ministers more than two months to prepare themselves to tackle the issue. Investors were quicker off the mark They immediately sent sterling lower but recently they have been having a rethink. After all, if even the government doesn't yet have a plan, how can investors continue to send the pound lower on mere assumptions?  "Brexit means Brexit" is not of terribly great help to them.

For a second successive day sterling was the top-performing major currency. Gains made in the last two weeks mean that over August the pound was unchanged, on average, against the other dozen most actively-traded currencies. The question now is how long this Indian summer will last. It could be a while.

The fringe
There was a considerable amount of thumb-twiddling going on yesterday. Half-cent moves were the order of the day among the majors while out on the fringes the goings-on in Brazil and South Africa had very different effects on their currencies.

The official impeachment of Dilma Rousseff and her replacement as president by Michel Temer had been so widely expected that the real was exactly unchanged on the day against sterling. After six months spent discounting that outcome the market had nothing more to say.

Police in Pretoria have been on Pravin Gordhan's case for a similar length of time but only recently did it begin to look as though he might have to stand down as finance minister. When a rumour circulated yesterday that he was about to be arrested the rand took another thirty-three-cent whack that left it -5% lower on the month and -12% below its mid-August peak.

PMIs and jobs
The focus today will be on the monthly round of purchasing managers' index readings from the manufacturing sector. Tomorrow it will shift to American jobs. To a greater or lesser extent all of the numbers will have implications for the Federal Reserve's monetary policy decision in three weeks' time.

The monthly change in US nonfarm payrolls is the most obviously relevant statistic but there are questions about its interpretation: after recent talk by Fed bosses of full employment, would a number smaller than the forecast 180k increase be seen to confirm that view or would it disappoint investors? The latter is still more likely.

Today's PMIs started badly with Australia falling from 56.4 to 46.9. Sweden's reading was down by five points at 50.7. Similar softness in the States might weaken the dollar, the assumption being that it would make the Fed less hawkish.