Pound pushes on

Stan the Man
Federal Reserve vice chairman Stanley Fischer was on TV again yesterday peddling the interest rate outlook that he has been touting around for the last couple of weeks. There was no coherent reaction from the US dollar, though it did have a reasonably good day.

Mr Fischer's line was that the federal funds rate could go up next month and that, were it to do so, it would not be a case of "one and done". Whilst sticking to the party line that each rate decision is driven by the economic data he did his best to seduce his audience into expecting two increases this year. Few observers see even the remotest chance of that happening so they were left to wonder whether Mr Fischer's hawkish stance puts him at odds with the apparently dovish majority on the FOMC.

If investors felt confused after last Friday's speeches they can hardly have been less so after Mr Fischer's appearance on Tuesday. In the aftermath of his comments they bought dollars but it was unclear whether they were doing so as a result of Mr Fischer's views or because of a four-point jump in the Conference Board's index of US consumer confidence. Still, the dollar took third place for the day, losing a fifth of a cent to sterling and about half that to the Kiwi. 

Brits confident too
The Gfk index of UK consumer confidence, like the US measure, was quite a bit better than expected, rebounding by five points from its post-referendum trough. It came too late to send sterling higher but only because the pound had already put in the day's best performance. 

Despite UK data that showed consumer credit and mortgage approvals falling in July sterling led the way during most of the London session. It strengthened by an average of 0.5%, adding a third of a euro cent.

This morning's Nationwide house price index was also positive for sterling. Prices rose by 0.6% in August and were up by 5.6% on the year. American house prices increased by 5.1% in the year to June.

Jobs and prices
The three ecostats attracting most attention today will be Euroland unemployment and inflation and America's ADP employment change. The former will be assumed to have an effect on next week's European Central Bank policy decision and the latter is supposedly a harbinger of Friday's official employment report.

Unemployment in Euroland is expected to tick lower to a provisional 10.0%. Inflation is pencilled in at a lowly 0.3% while the "core" index, which ignores food and energy prices, is supposed to be up by 0.9% on the year. The ECB's 2% inflation target will remain, for the moment, a distant dream.

ADP's employment change is predicted to show a 171k August rise. There is no direct link between that number and the change in US nonfarm payrolls but they usually move in the same direction. A strong number would help the dollar.