Morning Commentary: Pound Sterling Leads an Otherwise Quiet Market Day
A daily summary and commentary of events and factors that affect the global markets, with a particular emphasis on the foreign exchange markets.
Pound Sterling Leads an Otherwise Quiet Market Day
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David Atkinson Foreign Exchange Sales Manager
Former Secretary of State James Baker used to say that one of the best things about his job was that every day when he went to work, he walked into a new world. Something would have changed, you would think, but today is one of those days when he might question that.
North America walks into a trading day today that sure looks a lot like yesterday, at least when it comes to markets. We put a daily chart at the bottom of this commentary to illustrate where major currencies are from overnight. The South African rand has been a little active yesterday and today by a percent or so. When I set my Bloomberg to give me the same information for ALL currencies, the biggest mover is the Kyrgyzstan som at 2%. Kyrgyzstan is a beautiful Central Asian country, part of the old USSR, and I actually lived there a couple of years in a previous life.
Of the little action that did happen, Bank of England Governor Andrew Bailey remarked in a speech before the British Chambers of Commerce, that “we have looked very hard” at ways to add stimulus, including negative interest rates. Of course, this was first revealed last week at the BoE’’s regular policy meeting. It caused an immediate drop in the pound to a two-month low of 1.2717, but after he remarked on his remarks that it should not be implied that they are going there, there was an immediate recovery in the currency.
Fed Chair Powell and Treasury Secretary Mnuchin are on tap to testify before the House Financial Services Committee today. Odds are that a lot of discussion about fiscal stimulus will take place, with very little real action on said stimulus. From a macro perspective, there truly is increasing surprise at how well at least some U.S. sectors are doing these days, and Mr. Powell has already acknowledged that in his prepared remarks that were released Monday night.
One of those sectors is the U.S. housing market, with existing home sales data released today coming in as expected at 6 million, which is up from July’s 5.86 million. A podcast I listened to over the weekend pointed out the dissonance in media reporting in this area. So much attention has been paid to niche markets like the new work from home structure for Bay Area tech workers that broader market trends are not being taken in to account.
There actually was a central bank decision today. The Swedish Riksbank kept rates on hold, as expected, at a whopping zero percent.
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