Not fair

Sentiment not statistics

Legal decisions in the last couple of days are an inspiration to anyone in need of a windfall. One way to secure one is to run up a €5bn loss for your employer. A more efficient approach is to have the boss swear at you. Sterling is evidently unfamiliar with either method.

The pound was tail-end Charlie again on Wednesday. Its smallest loss was half a US cent, -0.3%. Its biggest decline was -2.2% against the NZ dollar and the average was -0.8%. As in the previous two days, there was no economic evidence to justify sterling's move, nor any new Brexit-friendly opinion polls to foment negative sentiment. But negative it was.

That negativity came despite some surprisingly good UK output figures. Having both been expected to be flat on the month, manufacturing production jumped 2.3% in April and industrial production was up by 2.0%. The annual increases were, respectively, 0.8% and 1.6%. Later in the day the NIESR estimated that Britain's economy had expanded by 0.5% in the three months to May. They were all decent numbers that in normal times would have supported the pound.

Kiwi flies

Some investors thought the Reserve Bank of New Zealand would cut its benchmark interest rate this morning. When it didn't, the NZ dollar was marked up by an immediate two cents and it continued higher.

Although the "official" expectation was that the RBNZ would keep the Official Cash Rate at 2.25%, there was at least a sporting chance that it would lower it to 2% or that the statement would include a heavy hint that a cut would be coming in August. In the absence of either of those the Kiwi was treated to a celebratory rally. Investors studiously ignored a warning in the RBNZ statement that "The exchange rate is higher than appropriate".

Something else that investors ignored was the -1.2% quarterly shrinkage of South Africa's economy. The rand set off higher after the announcement, almost as though the number came as a relief. It did get some help, though, when Fitch was the third of the big three agencies to confirm South Africa's "investment grade" rating.

Central Bankers

As London opens the president of the European Central Bank will be speaking in Brussels and as it prepares to close the governor of the Bank of Canada will be on his feet. Britain's balance of trade data this morning might be unwittingly uncontroversial.

Figures already out this morning showed weakness in UK residential property prices and Japanese machinery orders. China's headline rate of inflation slowed from 2.3% to 2% , Swiss unemployment was steady at 3.5% and Germany's trade surplus widened fractionally as imports edged lower.

Britain's trade deficit for April is expected to be unchanged at -£11.2bn: the EU component of that deficit could end up serving as ammunition in the Brexit debate. US jobless claims this afternoon will attract more than the usual interest following last week's soft payrolls number.