More output, more imports

Not pulling the trigger

In a situation reminiscent of Alexis Tsipras in Greece two and a half years ago, Catalonia's Carles Puigdemont could not bring himself to pull the trigger. Whatever the pain of remaining within Spain and the EU, leaving them would be a huge step to take.

Putting aside for a moment the illegality of Sunday's referendum - the Madrid government and the courts ruled it as such - it is hard to argue that Senyor Puigdemont had no mandate to declare independence. The 39.6% of registered electors who voted for it was proportionally larger than the 37.5% of the UK electorate who voted to leave the EU.

Whatever his reasons for holding back, the decision avoided putting the euro on the spot. It didn't have the best of days but it did strengthen by half a US cent and it went up by a fifth of a cent against sterling. But this independence business is not done with yet.

Production up

Of the four measures of UK production released on Tuesday, three beat forecast and one matched it. Sterling breathed sigh of relief despite the wider-than-expected trade deficit that was announced at the same time.

Manufacturing output went up by 0.4% in August and industrial production (it includes mining and energy) by 0.2%. The annual increases were 2.8% and 1.6%. Sterling's supporters were relieved to see positive numbers all round and pleased that the annualised growth rates to July were both upwardly revised.

The data might have helped the pound higher had it not been for the trade figures. Overall the gap for August was -£5.8bn and the deficit in goods alone was -£14.2bn, the biggest ever. Consequently the pound was on average unchanged on the day. It added quarter of a US cent and was flat against the Swiss franc and the Japanese yen.

Fed minutes 

This is a week of feast or famine when it comes to the economic data. Today it's famine, with nothing more than Spanish inflation (already out, 1.8%) and NZ food prices. The highlight will be a non-statistical one - the minutes of last month's Federal Open Market Committee meeting.

Tuesday's relative feast of ecostats included inflation figures from Norway (1.6) and Greece (1%). Industrial production Was up by an annual 5.7% in Italy and by 5.6% in Greece. The NIESR estimated that Britain's economy expanded by 0.4% in the third quarter. Overnight, Australian consumer confidence came in a point higher at 3.6%.

The Fed will publish the FOMC minutes at 1900h. Investors will be looking for confirmation of their expectation that the committee is gearing up to increase interest rates again in December. They will probably not find it but that will not stop them looking for clues. Investors will also be paying attention to the San Francisco Fed's John Williams and the European Central Bank's Peter Praet, both of whom have speaking engagements. The NZ food price index comes out this evening.