Jobs for everyone
There is continued consternation about the US administration, the more so following the appointment of a special prosecutor to investigate links between Donald Trump and the Kremlin. Anti-risk sentiment yesterday was not as strong as on Tuesday but it was still evident and gold touched a three-week high.
The introduction of a special prosecutor into the White House mix contributed to the notion that the administration's focus in the near future will not be on tax cuts, deregulation or infrastructure. Any stimulatory measures that investors may still be hoping for are unlikely to materialise this year. And that unlikelihood has at last begun to dampen expectations of two more interest rate increases from the Fed before Christmas.
The dollar was not the flakiest performer yesterday but only because the rand had a bad day, falling by -1.5% after a mildly disappointing South African retail sales figure. It lost around two fifths of a cent each to sterling, the euro, the Swissy and the Scandinavian crowns, which were just about unchanged against one another. The dollar was down by -1.2% against the safe-haven Japanese yen.
As suspected, UK wages are rising more slowly than prices. Figures yesterday showed average earnings going up by 2.4% in the year to March. Tuesday's numbers put inflation at 2.7% (CPI), 3.5% (RPI) or 3.8% (RPIX). The news did no harm to sterling because it had been well flagged.
As for the jobs data, a surprisingly high 19k increase in the number of jobseekers was balanced by a fall in the rate of unemployment to 4.6%, its lowest level in more than 40 years. Sterling's lack of reaction to the data appeared to be setting it up for a good day but it lost its shine after lunch and ended up roughly flat against the other dozen most actively-traded currencies.
Figures from Australia this morning showed unemployment falling there too, from 5.9% to 5.7%, after 37k jobs were added in April. They helped the Aussie dollar into second spot for the day with a half-cent gain.
Sterling's supporters will be hoping that April was a better month for UK retail sales than March, when they were down by -1.5%. The sales data will be the pound's last but one chance to impress investors before the end of the week.
The argument a month ago was that the shift of Easter from March to April would mean a matching switch in festive spending, exaggerating the weakness in March and the strength in April. Investors have seen the first half of that equation and they will be expecting a good number today. Analysts reckon on a 1.1% increase.
The only other even vaguely important data today are US jobless claims, the Philadelphia Fed's manufacturing index and Canadian investment flows. Tomorrow the CBI reveals the state of UK manufacturers' order books and Canada publishes the figures for retail sales and consumer prices. Inflation is expected to be 1.7%.