Odds and ends

Swapping ends

The gains and losses seen on Monday morning were upended yesterday. Canada's dollar - yesterday morning's leader - swapped places with the South African rand to share custody of the wooden spoon with the US dollar. Oil prices played a part, as did position adjustments ahead of tomorrow's Fed announcement.

Oil, having climbed more than 5% from Friday's close, ran out of breath as London opened. It fell by two dollars before settling about 2% higher on the day. Although it was a worthwhile gain for oil exporters it was hardly a massive windfall. The Norwegian krone was down by -0.4% and the Loonie by -0.7%. 

In joint last place with the Loonie the US dollar's downward drift had no obvious cause. The sensation was that investors were scaling down long-dollar positions in preparation for tomorrow's rate announcement by the Federal Reserve. With 99.9% of market participants expecting a quarter-percentage-point rise in the target for the Fed Funds rate only the most optimistic of them could be expecting the dollar to shoot higher when one is announced.

Different ends

Improved sentiment helped sterling as well as emerging markets and the South African rand, which went from last to first in the pecking order. The pound had a good day, losing out only to the rand and sharing second place with the euro. 

Economic data were vanishingly few during the London session. It was not until the Far East opened this morning that any useful numbers began to appear. Manufacturing sales in New Zealand grew by 2.1% in the third quarter, not far adrift from the downwardly-adjusted 2.2% by which they increased in Q2. Australian house prices went up by 1.5% in Q3, a slowdown from the 2.0% pace of increase in the previous quarter, and business confidence there was all but unchanged in November.

The data from China were reassuringly better than expected. Retail sales in November were up by 10.8% from the same month last year and industrial production rose by 6.2%. The figures eased concerns about China's economy and improved broader sentiment towards emerging markets.

Deflation ends

A handful of consumer price index data from around Europe this morning will fill out a picture which has recently pointed to a re-emergence of inflation. Most of them are highly unlikely to have any immediate influence on interest rates but they will help shape expectations.

First out of the traps was Germany, where CPI came in unchanged on the month at 0.8%. Spain should look very similar at 0.7%. The number from Sweden is likely to be higher but analysts have not offered any advance on the previous month's 1.2%.

Headline CPI in Britain is expected to be up from 0.9% to 1.1% for November, much of that increase being the result of a weaker pound. Such a number would still be well below the 2.8% by which consumers surveyed by the Bank of England expect prices to rise next year.