Sterling was one of the strongest G10 currencies last week. It got off to a strong start as Brexit related uncertainties appeared to have eased somewhat over the previous weekend.
Gains continued Tuesday on the release of stronger-than-expected UK industrial and manufacturing production data. We then saw some notable volatility on Thursday with the pound falling, initially after a downbeat press conference from UK Brexit Minister David Davis and his EU counterpart Barnier. The pound then rallied after a Handelsblatt story stated EU Brexit Minister Michael Barnier will offer the UK a two-year transition, providing they meet all their existing EU obligations.
A large pool of data releases and speeches from the UK to digest this week. Tomorrow brings the retail, producer, and house price index along with a speech from Bank of England governor Carney. Retail sales on Thursday and public-sector net borrowing on Friday bring the week to a close.
For the week, the pound gained 1.7% percent versus the Dollar, 0.9 percent versus the Euro and 0.9 percent versus the Yen.
A mixed week for the Euro with gains seen on Tuesday and Wednesday pared on Thursday and Friday.
The Euro gained midweek after Catalan president Puigdemont suspended the declaration of independence so dialogue could take place.
The ECB were in focus towards the end of the week with President Mario Draghi highlighting the importance of the term “well past” in their guidance. Chief Economist Praet may also have provided a weight as he argued that they should remain patient for inflationary pressures to show through convincingly in the data.
Eurozone consumer price index tomorrow and Mario Draghi’s speech on Wednesday morning will be in focus this week.
The US Dollar weakened against most of the G10 currencies last week with the Dollar Index losing 0.8 percent for the week.
Renewed fears that US President Trump would struggle to enact his plans for tax reform provided a weight on Tuesday as reports circulated of his feud with Senator Corker.
We saw a modest drop on Thursday following the release of the FOMC minutes – several officials suggested they would like to see more data before deciding whether to raise rates in December. The sharpest move came on Friday with the Dollar slumping after US CPI came in a touch shy of expectations although this proved short lived as losses were trimmed into the weekend.
Initial and continuing jobless claims will be released on Thursday, along with existing home sales on Friday.
The Japanese Yen was slightly softer on balance last week. Domestic data was encouraging with a wider than expected trade surplus for August and stronger-than-expected core machine orders.
Safe-haven flows may also have played their part as reports of earthquake-like tremors in North Korea circulated on Friday.
Bank of Japan Governor Kuroda may have provided a weight after saying they should maintain their policy stance as inflation is still someway from their two-percent target.
Domestic data last week was supportive with unemployment slowing to 3.1 percent and producer prices rising faster than expected.
Much like the Japanese Yen, safe-haven flows may also have played their part as reports of earthquake-like tremors in North Korea circulated on Friday.
The Aussie Dollar got off to a slow start after Chinese Caixin service PMI fell to a 21-month low on Monday.
Domestic data was more encouraging with improved reading for ANZ Roy Morgan Consumer Confidence, NAB business confidence and Westpac Consumer Confidence.
Data impulses were mixed last week – housing starts came in higher than forecast just before we saw a large drop in building permits.
At the Bank of Canada, Deputy Governor Wilkins warned that the household sector is vulnerable to any kind of negative shock due to its high level of indebtedness.
The Canadian Dollar will have found some support meanwhile from higher oil prices with US crude futures adding over four-percent for the week.
NEW ZEALAND DOLLAR
The Dollar got off to a slow start on Monday after Chinese Caixin service PMI slipped to a 21-month low and Chinese trade figures released on Friday also provided a weight.
Domestic data was also soft with ANZ consumer confidence falling to 126.3 in October from 129.9 and PMI fell to 57.5 from 57.9.
Providing some support meanwhile was a weekly gain of over four-percent for US crude futures.
The Swedish Krona saw a modest softening last week. The bulk of the decline came on Thursday after consumer prices rose at a much slower pace than expected – year-on-year CPI came in at 2.1 percent versus expectations of 2.4 percent.