An accidental hero

Some you win

Investors in Europe and America did not have much more to say after their colleagues in the Far East had registered their displeasure at Donald Trump's political upset. After token selling during the early London session the US dollar perked up a little and settled into its new levels.

Sterling was Monday's winner, picking up another half cent from the Greenback and beating the euro and Swiss franc by a nose. It strengthened by an average of 0.7% against the other dozen most actively-traded currencies (though almost half of that was the result of the South African rand's nosedive). The pound's success was almost accidental: there were no UK economic statistics and no political or monetary policy announcements from the UK. Its gains did, however, suggest that investors might be coming to terms with their Brexit fears and that the bulk of the damage to the pound has already been done. 

The rand had another one of its Gordhan Moments when it emerged that finance minister Pravin Gordhan had been called back to Pretoria by President Zuma. Investors, who have a soft spot for Mr Gordhan, surmised that he was about to be reshuffled out of the cabinet so they sold the rand. It was down by -3.3% on the day. Ironically, Mr Gordhan had been on a hearts-and-minds trip to win the support of credit ratings agencies.

Praet à ne rien faire

The euro started well, partly as a result of the anti-dollar mood and also because of strong German business confidence readings from IFO. Later in the day it received no help whatsoever from Peter Praet, the European Central Bank's chief economist, who said the €Z still needs "very substantial" stimulus.

Mr Praet was at odds with Jens Weidmann and Sabine Lautenschlaeger, the two Germans in the ECB high command who are pushing for tighter policy. Mr Weidmann said he would like to see "a less expansive stance" and Ms Lautenschlaeger advocated preparing for "a change in policy". 

In the United States the president of the Chicago Fed was dodging the question of further rate increases this year. Charles Evans said "two might be the right number" or if "inflation really picks up we could get, you know, four this year". Place your bets.

More from the Fed

Four more Fed worthies will be speaking this evening, all but one of them voting members of the Federal Open Markey Committee. Chairperson Janet Yellen will be among their number. There is not a whole lot on the ecostat agenda though.

Swedish retail sales and Italian industrial orders and sales account for most of the European list. The US numbers cover house prices, consumer confidence, the Richmond Fed's manufacturing index and the trade deficit. The easily-overlooked Japanese retail sales figures come out tonight.

The Fed chiefs will probably continue to do what they have done so well in recent months, managing expectations towards steadily higher interest rates without making any promises.