Unwanted excitement

All over the place

Sterling had an exciting day on Thursday. It went up by one US cent, drifted half a cent lower, plunged another cent and then recovered. All of that left it just about unchanged on the day against the US dollar.

The pound was already pointing north when the UK retail sales figures came out. Sales in April were up by 2.3% on the month and 4.0% on the year where analysts had forecast increases of 1.0% and 2.0%. Although there was talk of the Easter spending spree being a last hurrah before declining real earnings and maxed-out credit cards bring everything to a stop, investors bought into the headline and the pound went up.

Several hours later sterling fell sharply for no obvious reason. The best guess at the time was that investors decided it was looking expensive above US$1.30 and pushed it back below its levels immediately prior to the retail sales data. The drop was followed by a gentle overnight recovery and an inexplicable jump on Friday morning. From Thursday's opening levels the pound is up by a quarter of a US cent and down by a fifth of a euro cent. It is unchanged on average against the other dozen most actively-traded currencies.

Bother in Brazil

If Thursday was an exciting day for the pound it was a terrifying one for the Brazilian real. The real plunged -8% after a news paper reported credible evidence of president Michel Temer engaging in bribery. The Bovespa stock index dropped -10%.

After the evidence - a tape recording - was released by the O Globo newspaper there was a recovery for both the currency and the stock market. As Bloomberg put it, "many considered the tape to be inconclusive". But the scandal has damaged Mr Temer's position to such an extent that there are mounting calls for his resignation or impeachment.

This is not good news for the Brazilian economy or the real. As Oscar Wilde might have put it, to have one president impeached may be regarded as a misfortune; to have two impeached within a year looks like carelessness.

Marking time

Away from Britain and Brazil there was little on Thursday and Friday to motivate investors. That is likely to be the situation today too.

Thursday's Canadian inflation figures were all a touch lower than forecast, with the Bank of Canada's core consumer price index down by two ticks at 1.1%. Retail sales there were up by 0.7% in March, boosted by strong car sales. Sales excluding autos looked rather less impressive at -0.2%. The CBI reported an improvement in UK manufacturers' order books with the reading up from 4 to 9. Euroland consumer confidence went up from -3.6 to -3.3 in May, according to the EC.

This week kicked off with Rightmove's house price index, which was up by 3.0% on the year, and a narrowing of Japan's trade surplus. And that's just about it for the day.