Carney strikes again

A University of Geneva survey asked Europeans where they would rather live. Apparently the Swiss fancy Sweden and the Swedes like Switzerland. A surprising 80% think life in Britain is better than at home, despite UK politician's dire warnings of war and overpopulation. They think sterling's better than the euro too.

They did yesterday, anyway. The pound began to move higher almost as soon as London opened and extended its lead as the morning progressed. It hesitated only slightly when the UK public sector borrowing data for April confirmed that the chancellor's deficit reduction efforts had again missed their target. Overall, sterling was up by an average of 0.8%. It strengthened by exactly that much - a cent and a quarter - against the US dollar and added one and a half Swiss cents and nearly two euro cents.

Sterling's talisman, for the second time this month, was Bank of England governor Mark Carney. His commentary to parliament's Treasury Committee yesterday was in line with what he said two weeks ago when he introduced the Inflation Report: "a vote to leave the EU could have material economic effects - on the exchange rate, on demand and on the economy's supply potential". Investors saw his comments as supportive of the Remainers' argument and, thus, the pound.

Reasons to be cheerful?

Nowadays, a rising oil price is taken to be positive for the global economy. It was going up on Tuesday, adding 3% on the day to touch a seven-month high, so equity markets around the world went up too. The carry-through to currencies allowed the commodity-exporters to do reasonably well.

The South African rand was closest behind sterling, with the NZ and Canadian dollars not too far behind. Out at the back were the safe-haven yen and euro, both of which were down by -1.5% against the pound.

The US dollar received some help from a stonking 16.6% monthly increase in new home sales but the data did more to stoke broad risk appetite than the currency itself. In Brussels the Eurogroup reached agreement to pay the next tranche of bailout money to Greece and the sound of cans on streets echoed around the city. 

Bank of Canada

The most important event today is the Bank of Canada's policy announcement at three o'clock. Any change to the bank's 0.5% target rate would come as a shock. There will also be speeches by a couple of central bankers.

New Zealand set the statistical ball rolling overnight with a bigger-than-expected trade surplus as exports increased and imports fell. The news was worth a quick half-cent to the Kiwi but it could not hold onto the gain. European ecostats cover German and Swiss business confidence as well as Italian industrial sales.  

This morning Vice President Vitor Constancio will be speaking for the European Central Bank. After lunch Philadelphia Fed President Pat Harker will be representing the US Federal Reserve. Mr Harker is probably the one who counts.