Trumponomics hits a roadblock

Progressive pound

Sterling was looking comfortable as last weekend approached. Compared with last Monday's opening levels it starts today an average of 0.6% higher against the other dozen most actively-traded currencies. Over the seven days it was beaten only by that odd couple, the yen and the rand.

Thursday's UK retail sales figure had a lot to do with the pound's success. Coming two days after the inflation data delivered a positive surprise, the sales numbers were also well ahead of analysts' forecasts. The monthly increase of 1.4% in February was a full percentage point bigger than expected, as was the annual increase of 3.7%. The CBI's Distributive Trades Survey also made a contribution, remaining steady at 9% instead of slowing to the predicted 5%.

Friday's European ecostats also surprised on the upside.  There were nine provisional purchasing managers' indices from France, Germany and pan-Euroland and every one of them came in above forecast. The euro was Friday's joint second-best performer on Friday, strengthening by a third of a cent against sterling alongside the franc, the rand, the Swedish krona.

Doleful dollar

The top performer since Friday morning has been the Japanese yen, strengthening by 0.6% against the pound. The majority of that gain came this morning and was a by product of investors' disenchantment with the US dollar. The Greenback was half a cent lower at the back of the field.

The non-vote in the US House of Representatives came too late to affect financial markets on Friday but it has had a depressing impact in the Far East this morning. The president withdrew his Trumpcare health bill without putting it to a vote because it looked likely to be defeated by dissenters on both wings of the Republican party. Some were against it because it went too far in cutting care to their constituents, others because it did not go far enough.

Rightly or wrongly, investors believe its failure will have negative implications for the president's tax and infrastructure projects. Hence the decline of the dollar this morning and the relative strength of the yen.

Quiet start

The highlight of today's agenda, and it isn't much of one, will be the IFO figures for German business confidence. The come out as London gets going. This evening there are speeches from a slack handful of central bankers. There is precious little in between.

US Federal Reserve's Charles Evans and Robert Kaplan, the European Central Bank's Peter Praet and Guy Debelle from the Reserve Bank of Australia will be having their say tonight. They are all voting members of their respective monetary policy committees.

The focus of most investors, however, will be the failure of the US president's health care bill and what it might mean for the rest of his legislative programme. First thoughts are that his tax cuts, financial deregulation and infrastructure spending plans are no longer the done deal that everyone anticipated. So the US dollar appears to be on the back foot.