On average the pound strengthened by an average of 0.3% against the other ten most actively-traded currencies between last Thursday and this morning. That average conceals a wide range of results: gains of 1% or more against the Aussie, the Northern Scandinavian crowns and South Africa's rand and losses of more than 1% to the US dollar and Japanese yen.
Economic data from the UK were mostly helpful, the political narrative less so. Retail sales jumped 1.1% in March and were 6.7% higher on the year, both much stronger than expected. The CBI's Distributive Trades Survey suggested that April could be good month for sales too: its index jumped from -18% to +13%. There was disappointment, though, that a 17-year low for government borrowing still failed to match last month's forecast by the Office for Budget Responsibility, missing by £1.9 billion. In Westminster there was continued disagreement about Brexit and the prime minister's position was called into question almost on an hourly basis. Investors did not like that.
The tone of commentaries from Euroland was most definitely not bullish. IFO's three measures of German business confidence - expectations, current assessment and business climate - were all lower on the month and below forecast. The IFO opened its commentary with an observation that "the mood among German managers became slightly gloomier this month". A day later the European Central Bank's Economic Bulletin was peppered with "slower growth", "global headwinds" and "risks" which "remain tilted to the downside".
Last Thursday's provisional purchasing managers' index readings had been equally unhelpful to the euro. The numbers for pan-Euroland were all weaker than expected and at 44.5 the one for German manufacturing was well into the sub-50 contraction zone. All together they created a difficult atmosphere and the euro could manage no more than an average performance. It lost one and three fifths of a US cent and fell a third of a cent against sterling.
Investors were on the whole more appreciative of the US economic picture than they were of others in its peer group. In a world where just about every major central bank, from Canberra to Stockholm, has brought to a halt what used to be the rate-hiking cycle, the Fed's 2.25-2.5% benchmark interest rate is head and shoulders above the competition. Data today are expected to show US gross domestic product expanding by about 0.5% in the first quarter and some of those released over the last eight days looked fairly impressive.
Retail sales increased by 1.6% in March, almost twice as much as forecast. New home sales jumped 4.5% in the same month, confounding analysts' predictions of a 2.5% decline. Durable goods orders, admittedly a notoriously difficult statistic to forecast, went up by 2.7% on the month, more than three times the expected increase. Whilst there are many who believe the dollar is heading for a fall, it strengthened by nearly a cent and a half against sterling and by a cent and three fifths against the euro.
In a week that saw oil prices touch a six-month high the Loonie spent most of its time on the retreat against it main benchmark, the US dollar. It lost three quarters of a US cent while adding a quarter of a cent against sterling. The Canadian economic data were supportive of the Loonie. Retail sales increased by a monthly 0.8% in February, double the forecast rise. Wholesale sales went up by 0.3%, comfortably beating the expected 0.1% increase.
The real obstacle was the Bank of Canada. Investors cannot have been surprised that the BoC kept its target for the overnight rate unchanged at 1.75%. They ought not to have been surprised that the bank dropped any suggestion of tighter policy, implying that the 1.75% rate would continue indefinitely. But investors are conditioned to believe that a more dovish central bank means a lower currency, so down went the Loonie
There were two sets of Australian economic data during the eight-day week: Producer and import/export prices and consumer prices. One set did not make any difference to the Aussie. Figures this Friday morning showed export prices rising 4.5% in the first quarter while import prices went down by 0.5%. Producer prices were up by 0.4% over the same three months. There was no reaction to the numbers from the Aussie dollar.
The consumer price index numbers on Wednesday morning were a different matter. Investors had been expecting to see prices rising 0.2% in the first quarter and headline inflation slowing from 1.8% to 1.5%. What they actually saw was prices remaining unchanged in Q1 and inflation dropping to 1.3%. Investors immediately began to wonder not whether there would be a rate cut by the Reserve Bank of Australia but how many there might be. The Aussie has lost one and a half US cents and is two cents lower against sterling.
During the first half of the week the NZ dollar did what it quite often does when lacking in inspiration: It tagged along with the Australian dollar. That meant moving gradually lower, with no real sense of purpose. On Wednesday morning that link to the Aussie dragged the Kiwi lower when the Australian inflation data came in much lower than expected.
The following day the Kiwi developed a mind of its own, as a result of the NZ trade figures for March. Exports, a billion dollars higher on the month, exceeded forecast, while imports were unchanged and less than analysts had predicted. The resulting $922 million trade surplus was nearly four times as big as expected. The numbers were good enough to break the Kiwi's link to the Australian dollar and it headed higher, making back most of its earlier losses. It is three quarters of a cent lower on the week against the US dollar and unchanged against the pound.