On three of the last six working days the USD has led the major currencies and that was the case on Wednesday, with an average gain of 0.4%. CNN expressed surprise yesterday that the USD "has rallied 1.5% against other currencies after the Fed's January 30 meeting" at which the bank confirmed that it will be "patient" in adjusting policy. Yet that surprise ought not to be so great: with a Funds Rate target of 2.25-2.5%, the benchmark dollar interest rate is higher - and sometimes a lot higher - than America's G7 peers. The closest competitors among the majors are the CAD and NZD, both on 1.75%.
Wednesday's US economic data, which showed inflation slowing from 1.9% to 1.6%, did not make a case for a rate hike any time soon, but neither did they give the Fed cause to consider a cut.
Yesterday's report of continued decline in euro zone industrial production did not make it easy for the EUR and neither did it help that there was a general strike in Belgium. Trains and boats and planes were all affected, as were schools, factories and shops. Investors worried that it was sign of spreading populism in Euroland, especially as the strike was called by unions demanding shorter working hours, earlier retirement and higher wages.
This morning's gross domestic product data did not do much for the EUR either, even though they were not as bad as some had feared. German GDP was flat in the fourth quarter, narrowly avoiding recession. In pan-Euroland it expanded by 0.2% in Q4, taking growth for 2018 to 1.2% as economists had predicted. The EUR is down by 0.5% against the USD.
Although it could not keep up on Wednesday, losing 0.3%, the Loonie is unchanged against the USD from a week ago.
There were no Canadian data to save its bacon and, for once, the rising oil price did not work in its favour either. WTI crude was up by a mere 1.1%, not enough to buoy the CAD against the ebullient USD. The Loonie could conceivably get some help from today's manufacturing shipments and house price figures but they are not the most important data in its month.
Sterling had an average day, losing 0.4% to the USD and remaining unchanged on average against the other majors. The slowing UK inflation reported yesterday was not dramatic enough to force any change of policy onto the Bank of England and there were no data this morning.
The GBP's fate today is likely to be decided by what happens in the House of Commons. There will be more votes on amendments to the Brexit bill and the government could well come unstuck. None of the amendments is likely, of itself, to force the government's hand but investors will be looking for signs that a no-deal Brexit will at some point be ruled out, if not by the prime minister then by parliament.
The yen continued its retreat, losing another 0.3%. Since USD/JPY broke upwards through ¥110 on Monday the yen has fallen by 1.0% against the USD.
The Japanese gross domestic product data for Q4, released overnight, were not quite up to investors' expectations but at least they were better than the numbers from Britain, Germany and Euroland. GDP expanded by 0.3% in the fourth quarter. The JPY strengthened briefly after the data were released but within two hours it had given back its gains.