The dog that didn't bite

The first shall be last

In the immediate aftermath of the US election result the mood was decidedly "risk-off" with the safe-haven yen leading the field and the emerging-market proxy South African rand way out at the back. After due consideration investors completely reversed that situation. Intriguingly the pound is the top performer over the two-day period.

Donald Trump undoubtedly helped improve the mood with his acceptance speech. Instead of the bombast that has come to be associated with him Mr Trump was gracious in victory. He even threw in a couple of comments about policy, which investors interpreted as positive for commerce and industry. That, together with his already well-touted ideas about lower taxes, encouraged them to revise their initial shock-horror reaction.

As a result they deserted the safe-haven yen, Swissy and euro and piled back into equities and higher-yielding "risky" currencies. The rand strengthened by 2.6% while the yen fell -2.8%. A more instructive picture comes from the last 48 hours' moves. Here there is nothing to choose between the safe-haven trio and the risky NZ dollar and the net effect of the election looks minimal.

And the last first

Although sterling was left behind in the initial post-election turmoil it regained its poise later on Wednesday. Over the two days surrounding the vote sterling was, against the odds, the leader among the major currencies with an average gain of 0.8%. It is also the top performer over the last seven days.

It is not clear how the pound came to achieve this feat. One suggestion is that Donald Trump's unexpected win has overshadowed the Brexit risk. Another is that anti-establishment votes in Britain and the States might be mirrored in Euroland when the electorates in Italy, France and Germany have their say in coming months.

The NZ dollar fell behind the Loonie and the Aussie mainly as a result of central bank action. Although the Reserve Bank of New Zealand's overnight reduction of the Official Cash Rate from 2% to 1.75% was widely expected the statement warned of possible further cuts and said "a decline in the exchange rate is needed".

Back to basics

With the US election done and dusted investors will be able to return their attention to the routine of watching the economic data. It will be a tedious task though; the ecostats listed for today and Friday are a pretty dull bunch.

Today's highlight appears to be US jobless claims. Tomorrow's will be the University of Michigan's provisional consumer sentiment index. 

Of greater interest will be a speech by James Bullard, a voting member of the Federal Open Market Committee. Yesterday morning there were questions about how the surprise election result might affect the Fed's policy decision next month. Today there are fewer: most analysts think the central bank will push ahead with its second rate increase in 12 months. Even so, they would be happy to have confirmation of that from Mr Bullard today.