China tonight

Kiwi grounded

Researchers have discovered a 10-metre-long monster in Loch Ness. Using a robot submarine they found it resting on the bottom at a depth of 180m. Initial excitement turned to disappointment when closer examination revealed the Mattel logo on its belly. Unfortunate.

Even more unfortunate was the NZ dollar, which found itself at the back of the field this morning for no fault of its own.  The Kiwi took a one-cent dive after Australian employment data came in mostly stronger than expected. Unemployment ticked down to 5.7% with the addition of 26k new jobs. Despite a marked swing from full-time to part-time employment investors saw the numbers as positive for the Aussie, in that they reduced any downward pressure on interest rates.

Whilst there should be no negative correlation between Australian jobs and New Zealand's dollar, the suspicion is that the fall resulted from investors switching from one currency to the other. Overall the Kiwi weakened by a net one cent on the day while the Aussie went up by third of a cent. 

Retail rouses rand

Two sets of retail sales data helped the rand to the head of the pack on Wednesday, for entirely different reasons. A stronger-than-expected 4.1% annual increase in South African sales was positive for the economy while a -0.3% monthly fall in US sales appeared to support the case for a further delay in the Fed's tightening cycle.

By any normal logic, the unexpectedly weak US retail sales data should have led to a lower US dollar. However, that was not what happened: instead the Greenback delivered the day's second-best result, strengthening by more than a cent against the euro and the pound. 

Sterling was left on the sidelines. The only UK ecostat was the RICS housing price balance, released at midnight. It came in at +42 on a scale of -100 to +100, not as strong as last August's 53 but decent enough not to cause problems for the pound. On the day sterling was up by a quarter of a Swiss cent, down by half a Japanese yen and roughly unchanged against the euro.

€Z and US inflation

The finalised Euroland consumer price index data this morning are expected to leave the provisional headline rate of inflation unchanged at -0.1%. The equivalent measure from the United States, which comes out at lunchtime, is pencilled in at 1.2%. 

It is unlikely that the €Z figures will have any effect on the euro: they would have to be wildly adrift from forecast to have any influence on European Central Bank policy. The US data, likewise, will probably make little difference to the dollar. The other non-event will be the Bank of England's policy announcement at midday. Expect the Bank Rate to remain at 0.5% for an 86th month with many more to come.

An important batch of Chinese data come out overnight, including retail sales, industrial production and GDP. They could well have an effect on financial markets.