Pound wobbles again

Nothing to like

Perhaps the least surprising outcome at the end of last week was the way the US president distanced himself from other world leaders at the G19+1 summit meeting in Hamburg. It had minimal impact on exchange rates, unlike some of the economic data from North America and Britain.

As London got into its stride the Halifax bank reported a -1.0% monthly fall for house prices. The figure contributed to a negative mood which was exacerbated by data an hour later for UK output and trade. Manufacturing and industrial production both fell slightly in May, leaving industrial output -0.2% lower on the year and manufacturing 0.4% higher. At the same time the ONS reported a widening of Britain's trade deficit. The gap was actually bigger in May than it had been in the same month last year, prior to sterling's referendum-inspired plunge.

There was nothing in the numbers for investor to like: the supposed ability of a "more competitive" pound to boost activity and trade was nowhere in evidence and the possibility of an early interest rate increase faded even further. The pound fell an average of -0.7% on the day, sharing last place with the yen. Its losses included half a euro cent and three quarters of a US cent.

Good jobs

Employment data from North America beat almost all expectations. The US dollar strengthened slightly on the news while the Canadian dollar forged ahead for an average daily gain of 1.4% against the other dozen most actively-traded currencies.

A 222k increase in US nonfarm payrolls beat forecast by 43k and revisions to previous month added a further 47k jobs. The two dampeners were an uptick in unemployment to 4.5% and slow earnings growth. At 2.4% a year wages are ahead of inflation - most recently 1.9% - but not by much.

There were no such caveats attached to the Canadian figures. Unemployment was down to 6.5% and 45k new jobs were created in June. The numbers fed a suspicion that the Bank of Canada will take interest rates higher on Wednesday, so the Loonie went up. It added two thirds of a US cent and strengthened by two and a quarter cents against sterling. 

Few figures

There is little on today's ecostat agenda and none of it is likely to have much impact on the major currencies. 

China and Norway published inflation data earlier. In China the headline rate was unchanged at 1.5% and in Norway it slowed from 2.1% to 1.9%. The krone strengthened on the news: the yuan did not budge. Nor did the euro react to news that May's 1.4% increase in German exports exceeded the 1.2% rise in imports. Like Britain's inevitable trade deficit it's sort of expected.

For the rest of the day it is a matter of clutching at straws. Euroland investor confidence this morning will be followed by Greek inflation and industrial production. There is nothing of any consequence from the United States.