A stunning week for sterling took it an average of 2.7% higher against the other major currencies, with five daily wins in succession. Gains included four US cents and five Japanese yen. The pound is up 3.8% from a month ago. The entire move was driven by anticipation that the British government would be able to agree a new withdrawal agreement with the EU and that the risk of a no-deal Brexit would disappear. Sure enough, that did come to pass on Thursday, at which point the pound ran out of steam.
Two immediate hurdles stand in the way. The prime minister must persuade Parliament to approve the deal, preferably at the House of Commons extraordinary sitting on 19 October, and the EU27 must also sign off. The latter should not be an issue: the former might be, as the parliamentary numbers are so close. It is not over until it's over.
With most investors' eyes focused on the Brexit negotiations and sterling, the euro went largely unnoticed. There was, however, a positive knock-on effect from the discussions in Brussels: a Brexit deal would be less damaging to the Euroland economy than no-deal. So although the euro lost two and a half cents to sterling it picked up one US cent and strengthened by an average of 0.5%.
Economic data from the euro zone told a familiar story, with Germany finding it tough going and inflation almost everywhere falling well short of its 2% target. German wholesale prices fell 0.4% in September and were 1.9% lower on the year. ZEW's survey of investor confidence found "expectations slightly lower" in October. Inflation for the zone as a whole came in at a finalised 0.8%, with national measures ranging from -0.5% in Cyprus to +3.0% in Slovakia.
The dollar delivered the week's second worst performance, ahead of the Japanese yen. It lost an average of 0.5% to the other major currencies, giving up four cents to sterling and one to the euro. Significant US economic data were few and mixed. Last Friday's index of consumer sentiment from the University of Michigan was surprisingly strong at 96.0, almost three points higher on the month. Monday's retail sales figures revealed a monthly decline of 0.3% in September with the closely-watched "control group" unchanged on the month. Housing starts and building permits headed in opposite directions while industrial production fell 0.4%.
The House of Representatives continued to seek Trump's impeachment. On the matter of trade, the two main protagonists came to a truce as Beijing made "a series of modest concessions" and Washington suspended tariffs scheduled for 15 October. There were no signatures, just handshakes, but investors welcomed the de-escalation.
The Loonie had a better week than most, strengthening by an average of 0.7% against the other majors. It lost three and a quarter cents to sterling and added almost one US cent. It got off to a good start last Friday, helped by a good set of employment data. The number of people in work increased by 54k in September, more than five times as many as forecast, and the rate of unemployment fell from 5.7% to 5.5%. Wednesday's consumer price index numbers were less of a triumph for the Loonie. Consumer prices fell 0.4% in September, leaving the headline inflation unchanged at 1.9% where it was supposed to have gone up to 2.1%. Core inflation was also unchanged at 1.9%. Manufacturing shipments were stronger than expected, rising 0.8% in August.
Politically, the focus was on the imminent general election, which takes place on Monday. The opinion polls put the two biggest parties, the Conservatives and the currently-ruling Liberals, neck and neck, with psephologists giving a slight advantage to Justin Trudeau's Liberals.
The Aussie and the Kiwi both put in slightly above-average performances, unchanged against one another and an average of 0.3% higher against the major currencies. The Australian dollar lost four and a third cents - 2.4% - to sterling. Two related strings helped. The first was the minutes of the Reserve Bank of Australia board meeting. They revealed that the last month's rate cut was not as cut-and-dried as many has assumed: arguments were made on both sides, for a reduction and for no change.
That debate reappeared on the radar following Thursday's employment data .To an extent, the market takes into its stride the volatility of the monthly jobs numbers. Even so, good numbers cannot be ignored. Total employment went up by 14.7k in September and unemployment fell from 5.3% to 5.2%. The Aussie responded positively, despite a simultaneous report that business confidence "fell sharply" in the third quarter.
The Kiwi did what it does best, following the Australian dollar because it had no ideas of its own. There was no net change between the two of them over the week and almost no divergence along the way. The NZ dollar lost four and three quarter cents to sterling and added half a US cent.
Almost needless to say, NZ economic statistics were few. Three, in fact. The first put the number of visitor arrivals in August 1.8% ahead of the same month last year. The second, Global Dairy Trade's index, showed dairy prices rising 0.5% over the fortnight. Third, and considerably more important than the others, was the quarterly consumer price index report. Inflation slowed from 1.7% to 1.5% in the third quarter, a slightly better result for the Kiwi than the predicted 1.4%. The news was only briefly positive for the NZ dollar.