High-jump success

One swallow

During the Olympic games Great Britain's athletes collected 27 Olympic gold medals. Only the United States did better. Over the same fortnight Great Britain's pound lost an average of -1.9% of its value. Only Australia's dollar did worse.

Mercifully for Britain's holidaymakers and Audi drivers the pound found some relief towards the end of last week. After decent figures for UK inflation and employment, Thursday's retail sales data for July came as a huge relief to those who had feared economic activity falling into a black hole in the aftermath of the Brexit vote. Sales were up by 1.4% on the month and 5.9% higher than July last year.

The numbers were well ahead of the forecast 0.2% and 4.2% increases and were worth an immediate cent to sterling against the US dollar and the euro. Unfortunately, as staycationers have found to their dismay, more than one swallow is necessary to make a summer. The pound is still looking better this morning against most currencies than it did early on Thursday but the retail sales gains have been eroded somewhat and it is fractionally lower against the US dollar.

Keeping the dream alive

The dollar was the top performer over the weekend, adding one cent since Friday morning. There were no US data to help it: its success was entirely the result of comments by Federal Reserve worthies, who did their utmost to rekindle expectations of a rate increase this year. 

Foremost among them was Stanley Fischer, the Fed vice chairperson. While stopping well short of promising a 2016 rate hike Mr Fischer gave a particularly upbeat economic view to his audience in Aspen. "We are close to our targets… I expect GDP growth to pick up… employment has increased impressively… I am an optimist." He left investors still uncertain about a rate increase next month but gave the strong impression that, if it were up to him, there would be one.

Friday's ecostats were almost exclusively limited to UK public borrowing and Canadian inflation and retail sales. The former were alright and the later were not so sparkling. Prices fell -0.2% in July and sales were down by -0.1% in June. The Loonie lost a quarter of a cent on the day to sterling and dropped three quarters of a US cent.


Today's agenda is bereft of useful ecostats. The most important statistic is Canadian wholesale sales for June, a figure almost guaranteed not to get pulses racing.

That being the case, investors will be looking ahead to what the rest of the week might bring. Tomorrow sees the provisional purchasing managers' index readings; on Wednesday it will be second quarter growth in Germany; US durable goods orders come on Thursday; Friday's statistical highlights are the revised second quarter GDP data for Britain and the States.

An even bigger deal on Friday will be the Fed chairperson's speech at the Jackson Hole Policy Symposium. Will Ms Yellen echo her deputy's hawkishness?