USD

The political emphasis changed at the end of the week from Chinese trade barriers to Mexican walls. Congress is prepared to grant the president only a fraction of what he is asking for as a stage payment on the wall. Trump's response is a threat to trigger a partial government shutdown, by refusing to sign off pieces of the 2019 budget. Investors will find out by Friday whether the shutdown will take place. If it does, they are likely to lose some of their already-wilting enthusiasm for the USD.

Friday's data were not of much help in that direction. A 0.2% monthly rise in retail sales was gently encouraging but the provisional purchasing managers' index readings from Markit were disappointing. Manufacturing was down by a point and a half at 53.9 while services were a point lower at 53.4. 

EUR

The EUR drifted higher during the early London session despite a narrower Euroland trade surplus and a downward tick in inflation. Headline inflation came in at 1.9% for the year to November, just short of the 2.0% indicated in the provisional figures. 

Investors were more interested in the story from Rome, where the leaders of the coalition partners, Lega and 5Star, have reached a budget compromise with Prime Minister Giuseppe Conte. The assumption is that the new plan will comply with the European Commission's requirements and that relations between Brussels and Rome will return to an even keel. Investors see it as a positive development and the EUR is 0.3% firmer against the USD.

CAD

There was little initiative shown by the CAD on Friday in New York or this morning in the Far East and Europe. It moved back and forth across a narrow quarter-cent range without giving any sign that it might go anywhere. The CAD is an immaterial 0.1% higher on the day.

Disappointing economic data from Europe and the States hurt equity prices but did no obvious damage to commodity-related currencies. Even a 2.4% decline in oil prices did more damage to the Norwegian krone than it did to the CAD.

GBP

As ever, it was the Brexit story that dominated any discussion of the GBP. Also, as ever, it’s incredibly difficult to predict what comes next. However, the weekend's crop of op-ed pieces and media interviews suggests that the only practical way to release the parliamentary gridlock is to hand the decision back to the people who voted for Brexit two and a half years ago. Looking on the positive side (for sterling), the one thing that MPs can mostly agree upon is that Britain must not leave the EU without a deal.

The optimism might be misplaced: Legally, the country is committed to leaving on 29 March. Even so, the GBP is 0.1% higher against the USD. 

JPY

The yen is 0.2% firmer against the USD, not because of any news or data but simply because that was the way it drifted. There were no Japanese economic statistics this morning and none are scheduled for tomorrow.

The next important event on the JPY's agenda is the Bank of Japan monetary policy announcement due on Wednesday night. Even that is expected to make little difference to the JPY.