Pound higher

Sterling's Obama bounce

Researchers at Auckland University have discovered that junk food is alright as long as it is combined with a Mediterranean diet. So their message is that that deep-fried chicken pizzas are okay to eat, while the US president's is that EU membership is not to be scoffed at. 

Barack Obama's speech at the end of last week, in which he encouraged Britons to vote to stick with the European Union, has gone down well with investors. They believe it improves the Remainers' chance of success. That improvement, in turn, makes the pound somewhat less of a risky proposition. Mr Obama's advocacy of Britain's EU membership gave sterling two bites at the cherry; one when its content was leaked on Thursday and another when he delivered the speech.

The pound was the top-performing major currency on Thursday, narrowly beating the US dollar and the euro. It had a much clearer win on Friday and over the weekend, strengthening by an average of 1% against the other dozen most actively-traded currencies. Sterling's closest competitor between Thursday's London opening and this morning was the US dollar, which lost a cent to the pound. The antipodean dollars, the rand and the Norwegian krone were all behind by 2% or more.

ECB and BoJ

The European Central Bank's policy announcement on Thursday was pretty much in line with investors' expectations and had little impact on the euro. The Bank of Japan does not make its own announcement until Thursday but the yen has already come under pressure in anticipation of further easing.

Ahead of the ECB president's press conference some investors were speculating that he might say rate-cutting and stimulus had reached their limits. Instead, he said what most were expecting; that the bank would take further stimulative action if it were to become necessary.

There was a rush to cover long positions in Japanese yen after it was reported on Friday that the Bank of Japan is considering applying negative interest rates to its loans to commercial banks. The idea is that the BoJ would pay the banks to borrow. (The ECB is already doing this if the money is lent on to the private sector.)

German business confidence

The week gets off to a potentially slow start, with holidays in Australia, New Zealand and Italy. There are few ecostats on the agenda, none of them being of top-tier importance.

Sweden kicks things off with unemployment for March and Germany follows with the IFO measures of business confidence. At ten o'clock the CBI's industrial trends survey could show a further decline in UK manufacturers' order books. After lunch come US new home sales and the Dallas Federal Reserve's manufacturing index.

None of those has much chance of shaking up the FX market. The currencies to watch will be the yen, in the context of a possible jump in BoJ asset purchases, and sterling, which may or may not be able to hold onto its recent gains.