The Pound was broadly lower last week, weighed by disappointing macro data and some dovish Bank of England rhetoric. The pound lost nearly 1.5% against the Dollar, 0.8% against the Euro and 1.7% against the Yen.
We began on Monday with a miss for UK manufacturing PMI, followed by a soft construction PMI figure on Tuesday. A stronger service PMI figure on Wednesday provided a modest lift but normal service was resumed on Friday after industrial and manufacturing production figures both missed forecasts.
Market moving Brexit related headlines were few and far between although there was an EU report that suggested UK PM May and EU Council President Donald Tusk had agreed to try and reduce tension in the upcoming negotiations.
This week, inflation data due tomorrow will be the main focus, with the core CPI expected to slip back below two-percent. Labour market data due Wednesday will also be closely watched as well as any Brexit related headlines.
The Euro saw a fairly steady start to last week as Euro Zone PMI figures were largely unrevised and retail sales posted a welcome beat. The notable move came on Thursday following dovish remarks from ECB President Mario Draghi who said the current monetary policy stance is still appropriate and a reassessment is not warranted at this stage.
This week may well be a quiet affair with no standout data releases. Euro Zone investor confidence today and German ZEW tomorrow may provide some short-term volatility.
The US Dollar moved higher against most of the majors last week with the majority of gains seen on Friday following the US jobs report and comments from New York Fed Governor Dudley – the Dollar index hit its best level since March 15th.
The initial reaction to the US jobs report was Dollar weakness after the headline non-farm payrolls print fell well short of expectations at just 98,000 (f/c. 180,000). However, this proved short lived as investors began to focus on other aspects of the report and it also became clear that the adverse weather conditions may have had an impact.
Fed Chair Yellen speaks later today and this may well set the tone for the Dollar this week. US retail sales and CPI figures are due on Friday and will be closely watched as will any political developments out of Washington.
The Yen made small gains last week as the currency benefitted from safe-have flows after a notable increase in geopolitical risks.
Demand for the Yen began on Monday after the terror attack on the St Petersburg train line. This was followed by the US airstrikes on Syria late Thursday night and then the attack in Stockholm.
A few lesser data points to note this week but focus will likely be on geopolitical tensions, predominantly between the US and Russia after last week’s airstrike.
The Australian Dollar was one of the worst performing G10 currencies last week, losing 1.9% against the Yen and 2.0% against the US Dollar.
The RBA policy decision on Tuesday was the main driver as the statement struck a notably cautious tone as rates were kept on hold. Weak Australian retail sales on Monday and some soft Chinese PMI prints also weighed while the slump in iron ore prices on Friday ensured the downward trend continued into the weekend.
The jobs report and the RBA financial stability review on Thursday will be the main focus this week.
It was not the busiest week for the Swiss Franc as it lost just 0.6% against the Dollar and was relatively flat against the Euro.
The Swiss currency saw some modest upside on Thursday after CPI figures were a touch stronger than expected. Safe haven flows also provided a lift on Friday after the Syrian airstrikes and Swedish terror attack, although this proved to be short lived.
Moves in the Canadian Dollar were relatively muted for most of the week until investors had the employment report to work with on Friday. The Canadian economy added 18,400 jobs in March, beating forecasts of 5,000.
This week, all eyes will be on the Bank of Canada on Wednesday and their latest policy decision where rates are widely expected to remain on hold.
NEW ZEALAND DOLLAR
There was not much action in the New Zealand Dollar last week. A poor GDT auction on Tuesday prompted the largest move as the NZD posted a 0.6% daily loss against both the Dollar and the Euro. Soft Chinese PMI figures and a mildly dovish RBA statement may also have weighed.
The Swedish Krona fell last week with losses compounded on Friday after news broke of the terror attack in Stockholm. Earlier in the week, stronger than expected PMI data on Monday and industrial production figures on Wednesday provided some modest support.
Moves in the Norwegian Krone were limited last week. Manufacturing PMI beat expectations on Monday and provided some modest support while a weekly gain in crude prices will also have helped to underpin the Krone.
SOUTH AFRICAN RAND
The South African Rand fell sharply last week amid the recent political upheaval, losing 2.5% against the US Dollar. Rating agency S&P cut South Africa to ‘junk’ status on Monday while Fitch followed on Friday and Moody’s have placed the rating on review for a downgrade.