In the week since Theresa May pre-announced her resignation the pound has lost an average of 0.2% to the other ten most actively-traded currencies. It is down by half a US cent and unchanged against the euro. There are two main reasons for its relative lack of movement: the prime minister's resignation was more a matter of when than whether, and investors have spent nearly four weeks pricing the possibility of a disorderly Brexit back into the pound's value.
Although the Brexit process has now ground to a halt, pending the selection of a new Prime Minister, its looming presence still overshadows the UK economic data. Not that there were many UK ecostats to overshadow. Last Friday's official sales figures were less weak than forecast while the CBI found sales falling "at the fastest pace since October 2017". Consumer confidence was "sunnier in May but [the] long-term forecast is less certain".
The European elections went much as expected, with the traditional centre-left and centre-right groups losing votes and parliamentary presence to the greens and right-wing nationalists. This dilution of the traditional centre will make it trickier to select candidates for five top jobs, including the replacement for Mario Draghi at the ECB, who can win the approval of parliament. Elsewhere on the political front, the European Commission's first move after the elections was to put pressure on Italy to bring its budget deficit into line with EU rules. In theory the country could be fined billions of euros if it fails to do so.
Economic data from the euro zone were generally lacklustre. There was a slight improvement in Italian and Euroland consumer and business confidence. German unemployment ticked up to 5.0%. There was nothing contentious among the data but nothing, either, to endear the euro to investors. It had just as unproductive a week as sterling, losing half a US cent and holding steady against the pound.
For the dollar the week was all about Trump's trade war. The situation was not looking great even on Thursday. China had threatened to restrict exports of the "rare earth" elements crucial to electronic manufacturing and accused the United States of "naked economic terrorism". The People's Daily newspaper said "United States, don't underestimate China's ability to strike back" and "Don't say we didn't warn you!".
The US government took it all to a new dimension on Thursday night when he announced tariffs on imports from Mexico, not as trade protectionism but as an economic weapon to discourage migration. There was no direct impact on the US dollar but it scuttled US shares, with the DJ30 index dropping an instant 1%. As with Britain, the politics trumped the economic data, which were not particularly pretty anyway. The dollar is half a cent higher on the week against sterling and the euro.
Two events shaped the Loonie's week: monetary policy and trade. The monetary policy factor had the least impact, as the Bank of Canada kept its target for the overnight rate steady at 1.75% for an eighth month. Investors hoping for hint at future rate direction were disappointed. A far bigger matter was the US president's imposition of tariffs on Mexico. Although his spite was directed specifically at Mexico, investors fear that he might get a taste for using trade sanctions as a diplomatic tool. It all makes the US-Mexico-Canada Agreement look rather redundant and sets up Canada to be next in the firing line.
There was little to glean from the Canadian economic data, which were limited to the current account for the first quarter. The Loonie did feel some downward pressure from oil prices, which fell about 8%. It lost a third of a US cent and is all but unchanged against sterling.
The Aussie was one of the more successful currencies, taking second place in the top ten behind the Swedish krona. It added a quarter of a US cent and strengthened by a cent and a half against sterling.
It was last Friday that the Australian dollar made most of its progress. When the economic data appeared this week they took some of the shine away, for almost all of them were either lower on the month or below forecast. Building permits fell 4.7% in April and were down by 24.2% on the year, underlining the parlous state of Australia's residential property market. Private capital expenditure fell 1.7%. New home sales were down by a monthly 11.8% in April. The only even vaguely-helpful statistics came from the Reserve Bank of Australia, with private sector credit growing by 0.2% on the month and 3.7% in the year to April.
The Kiwi received the usual reward for keeping its head down: it was unchanged on average against the other ten most actively-traded currencies. It was just about unchanged against the US dollar and added two third of a cent against sterling.
ANZ's Business Outlook described the situation as "a decidedly mixed bag", with business confidence improving to -32% and inflation expectations falling to 1.8%, the lowest level in more than two years. Residential construction intentions fell sharply again despite the ruling-out of a capital gains tax. Employment intentions in the construction sector also fell sharply, to their lowest level since 2009. NZ building permits were down by 7.9% in April after a downwardly-revised 7.4% drop the previous month. A speech by Reserve Bank of New Zealand governor Adrian Orr focused on "financial resilience" and added nothing to the monetary policy picture.