With a single bound…
According to the Financial Times, economists at the St Louis Federal Reserve have come up with "a new approach to analysing the US in which they no longer try to predict what the longer-term outlook is". The report doesn't say what they will spend their time on instead.
It is fair to say, however, that not making predictions about the outlook for exchange rates would have been the winning strategy in the middle of last week. It would have taken a brave economist to stand against the tide of sterling weakness with a forecast that the pound would be the week's top-performing major currency. But that is how it turned out. Sterling moved gently higher on Friday and powered ahead in the Far East this morning, electrified by opinion polls showing a swing from Leave to Remain.
Compared with Friday morning's opening levels the pound starts today an average of 1.6% higher against the other dozen most actively-traded currencies. Its biggest gain is against the safe-haven Japanese yen, where it is 2.8% ahead. The pound has also picked up three and a half US cents and one and a half euro cents. It is roughly two and three quarter cents up on the Australian, Canadian and NZ dollars.
The two poorest performers over the weekend were the Japanese yen and the Indian rupee. Their losses are sure to be eclipsed today by the drubbing that the Nigerian naira will suffer when Lagos opens for business.
The yen's poor performance was entirely related to sterling's renaissance this morning. With Remainers in the lead again nervousness was assuaged and investors felt less need for their yen security blankets. The rupee's slippage was prompted by the announcement by Raghuram Rajan that he would not stand for a second term as governor of the Bank of India. Mr Rajan is widely respected and his departure worries investors.
Today the naira will float freely for the first time since it was pegged to the US dollar a year and a half ago at a rate of ₦197. The peg kept the naira at an unrealistically high value, throttling commerce: its float will mean an instant devaluation.
This week will be dominated entirely by the UK referendum, which is now a cause of global economic anxiety. It means the opinion polls will have vastly more influence on financial markets than the economic data, however theoretically important they might be.
The Japanese figures released earlier today were fairly horrid, with falling imports and exports producing an unexpected trade deficit. Rightmove put the average asking price for a UK house at £310.5k in June, about £100k more than the average selling price. NZ consumer confidence was down by -3.6 points at 106.0 in Q2.
With those out of the way the only data that remain are Euroland construction output and Canadian wholesale sales, both for April. Australia's house price index comes out tonight. None really matter.