Panic not

Twenty-buck Rolex watches and Hermès handbags do not raise any eyebrows in China. But how about counterfeit jellyfish? Made from a mixture of alginic acid, ammonium alum and calcium chloride anhydrous, it is said to be quite flavourless. The currency market faces a similar allegation.

There was some movement of exchange rates yesterday but it was not always easy to see. In sterling's case it was an upward drift during the morning followed by an aimless meander after lunch. It didn't go a long way but it was far enough to put the pound in second place, a nose ahead of Canadian and Australian dollars and the Norwegian krone which tied for third. 

Investors found no fault with UK trade figures that showed a smaller-than-expected deficit in March. They took the pound an average of 0.2% higher against the other dozen most actively-traded currencies, awarding it half a US cent, half a Japanese yen and a third of a euro cent. It might come as a surprise to see that sterling has been the top-performing major currency over the last month, recovering by an average of 3% as the Brexit panic subsided.

Kiwi relief

Mimicking the pattern of last Thursday, the outliers were the South African rand and the NZ dollar. The rand was down by 14 cents, bringing its loss for the week to -2.7%. The Kiwi added three quarters of cent, reducing its weekly loss to a cent and a half.

There is not much to say about the rand, which on five of the last seven trading days has been the weakest performer. After recovering during the first three and a half months of the year the rand seems to have fallen back into decline as the economic realities resurface. Monday's uptick in unemployment, from 24.5% to 26.7% did not help matters.

The NZ dollar enjoyed a brief rally this morning when the Reserve Bank of New Zealand failed to make any immediate change to monetary policy. Whilst its Financial Stability Report did mention the possibility of "macroprudential" measures (such as bigger deposits for house-buyers) it did not hint at any imminent move.


At the top of today's ecostat bill are Britain's data for manufacturing and industrial production. Small monthly rebounds are expected to leave both measures lower on the year. 

The monthly changes in UK production have been, to say the least, erratic in recent months. February's -1.1% decline in manufacturing was the biggest in three years and the predicted 0.3% increase for March would still leave output -1.9% lower on the year. Good strong numbers would be helpful to sterling but investors are not holding their breath.

On the non-data agenda watch out for the goings-on in Brasilia, where Dilma Rousseff could be enjoying her last day as president. Her impeachment is expected today. Anticipation of the event has allowed the real to strengthen by 16% over the last three months: Its realisation could come as an anticlimax.