Sterling lost ground across the board last week amid ongoing Brexit and election jitters. Fresh concerns were raised after Brexit Secretary Davis’ said that the UK could quit Brexit talks unless the EU drops the divorce bill demand – as high as €100 billion.
There were added concerns from fresh UK polls showing the Labour Party gaining ground on the Conservatives ahead of next week’s election.
For the week, the pound lost 1.8% against the US Dollar, 1.6% against the Euro and 1.7% against the Yen.
Looking ahead, Sterling will continue to be gripped by Brexit and polling data while manufacturing PMI data on Thursday will also be in focus.
The Euro was mixed last week. It rose on positive data from the flash PMIs of France, Germany and the Eurozone to the German IFO survey. However, dovish ECB speeches hampered the single currency’s move higher with President Draghi saying he sees no reason to deviate from central bank guidance.
Meanwhile, Chief Economist Praet emphasized the need for a sustained increase in inflation metrics before the ECB could act and Constancio also cautioned against removing stimulus too early.
This week, Eurozone nations will report their preliminary inflation figures for May alongside PMI data.
The US Dollar remained on the back foot at the start of last week, with the Dollar Index dropping to its lowest level since the election-day spike back in early November on more damaging headlines regarding Trump-Russia.
Fed minutes which showed that voters were waiting for more evidence that a minor slowdown in the economy was transitory. However, market players got some assurance on Friday when US GDP was revised up and Durable Goods beat estimates, boosting the Greenback across the board.
Looking ahead, plenty of data will be on tap for participants to digest, most notably the Non-Farm Payrolls report on Friday.
It was a mixed week for the Japanese Yen, boosted early on by safe-haven flows after another North Korean missile launch, before the strong performance of global equity markets saw the currency become less desirable. In terms of data, Japan posted another trade surplus as exports rose again although reaction was minimal.
Cautious sentiment, against the backdrop of the missile test by North Korea and political uncertainty in the US, remained supportive for the Swiss Franc’s safe-haven appeal at the start of the week. However, improved risk sentiment saw the currency become less desirable as the week progressed while investors ignored a larger than expected drop in trade surplus data from Switzerland.
It was a mostly negative week for the Australian Dollar, weighed by Moody’s unexpected downgrade of China’s sovereign ratings which in turn saw a slump in industrial metals like copper, nickel, zinc and iron ore.
It was a positive week for the Canadian Dollar. Higher oil prices lent some support ahead of the OPEC meeting in Vienna, while it also benefitted from the Bank of Canada holding rates steady amidst a more optimistic economic forecast.
Data wise, we saw wholesale sales rose 0.9 percent in March missing the expectations of 1.1 percent although the reaction was minimal.
NEW ZEALAND DOLLAR
The New Zealand Dollar clocked the biggest gains in the G10 space last week. The commodity-linked Kiwi’s solid performance seemed to be fuelled by the rising crude oil prices along with the better-than-expected New Zealand trade balance data. However, there’s was little reaction to the budget, which offered nothing to excite traders.
The Norwegian Krone weakened last week after a survey indicated that companies’ investment estimate for the next year within oil and gas, manufacturing, mining and quarrying are expected at around NOK192 billion, 3 percent lower than the corresponding figure for the current year.