Politics vs economics. They don't always go hand in hand. A surprise correction in UK wages from UK statistics officials on Monday helped to spark a relief rally in the pound, which was the top performer. This morning's UK data on trade (negative) and industrial production (positive) were the sole development of the day.
Cable gained a full cent after the ONS revised Q2 labour unit costs to 2.4% from 1.6% y/y. That's a big shift for the BOE and helps to underpin hopes for a Nov 2 hike. The market is pricing a 78% chance that Carney pulls the trigger then.
NZD remains the worst performer of the week because of an election where the nationalist First Party finished a distant third but holds the balance of power. Coalition negotiations are ongoing but the uncertainty could continue to weigh on NZD.
It was an unusual day in North American markets. Canada was closed while in the US the bond and futures markets were closed but stocks traded. After a hitting a record high, the S&P 500 stumbled late to finish down 5 points and that worked to drag down USD/JPY to 1.1740.
Expect a barrage of speeches from global central bankers and finance ministers in Washington DC ahead of the weekend's autumn WB/IMF meetings. This coincides with the 10-year anniversary of the peak in global indices.
CFTC Commitments of Traders
Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.
EUR +91K vs +88K prior GBP +20K vs +5K prior JPY -85K vs -71K prior CHF –3.2K vs -1.8K prior CAD +75K vs +75K prior AUD +72K vs 77K prior NZD +8K vs +8K prior
Sterling traders are really licking their wounds. They finally put on a sizeable long and it blew up on political drama. Those holding CAD and AUD longs are likely beginning to feel some jitters.