Tranquility

AAA OK

The Australian Treasurer's budget, which he delivered yesterday, elicited minimal response from the currency world but seems to have kept the ratings agencies happy. Two of the big three, Fitch and Moody's, confirmed Australia's triple-A credit rating and everyone relaxed.

Truth to tell, investors were already fairly relaxed. The CBOE Volatility Index, otherwise known as "the VIX" or "the fear index" is close to its lowest since 1993. Although the VIX strictly relates only to the US S&P500 stock index it also serves as a proxy barometer for financial market sentiment on a broader scale. When it is high, prices are expected to be volatile and when it is low they are not. It is low at the moment, below 10, indicating that investors are considerably less nervous than they were at the height of the global financial crisis when the VIX touched 60.

A symptom of that unconcern was the relative lack of exchange rate movement yesterday. Sterling and the US, Canadian, NZ and Australian dollars were all unchanged against one another. The five were beaten, though not by much, by the South African rand which continued its oscillation between the front and the back of the field for a fourth day.

ECB preparing to get ready

There have been more - unnecessary - reminders that Berlin would dearly love to see the European Central Bank normalising monetary policy. On Monday it was Axel Weber, the erstwhile Bundesbank chief who is now chairman of UBS. Yesterday it was Wolfgang Schäuble, the German finance minister.

The message from both men was that the ECB Governing Council will be discussing a wind-down of the bank's asset purchase programme when it meets next month. No immediate change to policy is likely from that meeting but M/s Weber and Schäuble have joined a growing number of analysts expecting a change to the tone of the ECB's language.

There has been little reaction so far to the news that Donald Trump fired the head of the FBI last night. The world's relaxed investors might be able to turn a blind eye to this development. Alternatively they could see it as a negative: there is no potential upside here for the dollar.

Draghi and Wheeler

A smattering of inflation and other ecostats should be enough to keep investors gently occupied between the day's two main events: appearances by the ECB's Mario Draghi and the Reserve Bank of New Zealand's Graeme Wheeler. Both central bank chiefs will have something to say about monetary policy.

Mr Wheeler will be hosting a press conference after the RBNZ announces its rate decision. No change to the 1.75% Official Cash Rate is expected. However, the pick-up in inflation could persuade him to get off the fence and take a more hawkish line.

For Sig. Draghi there will be no escape. He is attending an event described by the ECB website as an "Exchange of views with the President on the impact of monetary policy".