Antipodeans retreat

Cover up

Public health experts are advising people to avoid overexposure to the bright orange circle in the sky: it will be visible during the next few days before disappearing for 11 months. Overexposure to the antipodean dollars is also said by some to be risky.

The Australian and NZ dollars have been the weakest performers so far this week, both falling by -0.7%. In both cases it is the likelihood of lower interest rates that has led investors to mark them down. 

For the Aussie it was the minutes of the Reserve Bank of Australia board meeting a fortnight ago that did the damage. The final sentence, woolly as ever, said that next month the board would be able to "refine its assessment of the outlook for growth and inflation and to make any adjustment to the stance of policy that may be appropriate". Nobody, but nobody, imagines that any adjustment would be other than downwards. 

In the case of the Kiwi it was a consultation paper outlining the Reserve Bank of New Zealand's plan to require higher deposits from house-buyers. Investors believe the change is related to the bank's imminent economic update, which they expect to pave the way to a rate cut.

Sterling neutral

With the exception of the falling antipodeans and the persistently robust South African rand - it added another 12 cents yesterday - the major currencies did not move far. Sterling was net unchanged, on average, against the other dozen most actively-traded currencies.

No new crises emerged to drive exchange rates and economic data were thin on the ground. Canada reported a net $10bn inflow of foreign securities investment while in the United States money moved in the opposite direction, to the tune of -$11bn. The US NAHB housing market index was just about unchanged at 59.

The Bank of England's Martin Weale, in his swansong speech, provided some balance to Andy Haldane's unfettered dovishness last Friday. He didn't pack the same verbal punch as Mr Haldane though, and sterling's upward reaction was muted.


A dozen measures of UK inflation come out at half past nine, closely followed by ZEW's assessment of German and pan-euro-zone investor sentiment. After lunch come US housing starts and building permits and the Bank of England's Ben Broadbent will be talking to a parliamentary committee about Bitcoin.

The UK consumer price index data for June will not be a great deal of help to investors. Because the prices are checked "around the middle of the month" they will mostly predate the Brexit vote and sterling's subsequent tumble.  The Bank of England might indeed be considering a rate cut but the rate of inflation will have little or nothing to do with its decision.

Although it only appears as a small dot on the FX radar, the Turkish central bank's monetary policy committee will make a rate announcement this morning. Analysts expect a cut to the bank's benchmark Repo rate, from 7.5% to 7.25%.