Sentiment continues to yo-yo

UK consumer confidence bounced back
to post at 18 month higher earlier this morning, but before getting
too excited another way to describe the move would be consumer
confidence moving from awful to less awful, and so the Pound is
unsurprisingly unchanged in trading this morning. The move higher
in measured consumer confidence is a welcome one, but is probably
still the afterglow of the summer Olympics. It is likely the boost
is temporary and will start to wear off over the next few months.
With that in mind the Bank of England will be waiting in the wings
with one hand on the printing presses, the market realises this and
is refusing to get very excited about positive data releases. We
seem to be trapped by our expectations of doom. Very British
indeed.

The Euro continues to yo-yo around
as the pendulum of sentiment for the single currency pushed from
one side by the on-off Greek deal, and from the other by positive
economic data this week. Euro zone industrial production posted
above estimate as did business climate data and we await euro zone
unemployment data this morning. Also speaking today are IMF chief
Christine Lagarde and ECB head Mario Draghi, with both likely to
paint a challenging but stable outlook for the Euro area. Expect
them also to touch on ongoing correction of imbalances and how it
is progressing.

Next week is the triple header of
BoE, ECB and RBA central bank meetings. Only the RBA are expected
to act, with a quarter point cut to rates on the cards. Friday is
US non-farm payrolls and with Fed policy now tied to the
unemployment rate it remains the key number throughout the
financial markets.