Governor helps sterling

Six out of eight ain't bad

Mark Carney is not, after all, going to serve the full eight years of his term as Bank of England governor (Boo!). However, he won't be leaving at the first possible opportunity after five years: he's staying for six (Hooray!). The news was positive for sterling.

Financial markets have a less jaundiced opinion of the governor than do certain Westminster MPs. They would have been unhappy to hear that he was planning to jump ship in the midst of Britain's effort to extricate itself from the EU. There was therefore relief that the good doctor will soldier on until the theoretical end of the two-year Brexit process. On average the pound was fractionally ahead on the day, losing out only to the rand and the Australian dollar. 

The rand popped higher when South Africa's chief prosecutor said finance minister Pravin Gordhan no longer faced the charge of fraud that had been hanging over him for six months. It strengthened by a net 1.5% on the day, leaving it 28.6% above its position at the beginning of the year. The Aussie picked up a third of a cent when the Reserve Bank of Australia left its Cash Rate unchanged at 1.5% and issued a statement that avoided mention of possible rate cuts.

Friendly data

Except for a disappointing -1.4% monthly fall in German retail sales Monday's ecostats were roughly in line with market expectations. The numbers gave investors nothing to chase and they found no reason to chase the major currencies around. 

UK personal loans were steady and mortgage approvals slightly higher on the month. The euro zone economy expanded by a provisional 0.3% in the third quarter, leaving the pace of growth unchanged from Q2. Euroland inflation was also steady at 0.5%. 

In the United States a 0.3% increase in personal income was outpaced by a 0.5% rise in personal spending. The Dallas Federal Reserve's manufacturing index improved by two points to -1.5.

PMI day

As ever, the first of the month is marked by the release of purchasing managers' index readings, most of them relating to the manufacturing sector. Australia kicked things off with a one-point improvement to 50.9 and China's two manufacturing PMIs both rose to 51.2, heightening investors' appetite for risk.

Ahead of London's opening the krona took an upward turn when Sweden's manufacturing PMI came in at a mighty 58.4. That level is unlikely to be challenged today, especially as the only serious contender, Spain, has the day off for All Saints' Day. Analysts have pencilled in the UK for a 54.5 reading: that would be enough to see off the rest of Europe and North America even though it would represent a one-point fall on the month.

In any other business the governor of the Bank of Canada has a speaking engagement this afternoon and the NZ dollar will be at risk to two sets of data, for milk prices and Q3 employment.