North American holidays leave currencies stranded


Presidents' Day meant a low profile for the USD. There were no economic data from the States and none from anywhere else either on Monday. Investors' optimism on trade was dented by the president's threat to treat German-made BMWs as a threat to national security, in order to apply punitive taxes, but it has yet to be seen whether it amounts to more than bluster.

The dollar was just about unchanged against most of the major currencies. 


Chancellor Angela Merkel spoke out against Trump's characterization of German-built autos as a security threat. She hinted that Europe would retaliate in kind if tariffs were to be applied. The other outstanding voice on Monday was that of European Central Bank chief economist Peter Praet. Continuing the theme of his colleagues he told a German newspaper that a prolonged slowdown and low inflation might require a change to policy guidance. Thus far, the ECB has spoken of low interest rates "through the summer". Mr Praet evidently wonders if "summer" might usefully be changed to "fall", "winter" or even some later season.

Eurozone data this morning were mostly-low-key. Italian industrial sales and orders both fell by more than expected in December. ZEW's surveys of German and Euroland investors found them mostly more upbeat about the economy. Careful examination will reveal that the EUR is minutely lower against the USD.


Like the euro, the CAD is down by an almost invisible 0.1% against the USD. Family Day in most of Canada meant an hiatus in the already-sketchy supply of economic statistics and oil prices went nowhere. A general drift away from commodity-related currencies affected the Loonie less than the AUD and NZD, perhaps because Canada was on holiday.


Monday was an eventful day for the GBP, even though the currency was eventually unchanged against the USD. UK employment data this morning were reasonably helpful, even though two of the figures came in a tick below forecast. Unemployment was steady at 4.0% and wages - both with and without bonuses - went up by 3.4% in the year to December. With inflation last seen at 1.8% it means more of a boost to real earnings.

The big economic story on Monday was that Honda will end production at its auto plant in Swindon, England, after 30 years. Up to 3,500 people will lose their jobs. Whilst the informed opinion is that the closure is a function of difficult trading conditions for auto-makers, not of Brexit, the uncertainty will not have improved matters.


The yen moved further than its peers losing 0.2% to the USD. It was steady on Monday but took a step to the rear overnight when Bank of Japan governor Haruhiko Kuroda addressed Japan's parliament. Noting that "currency moves could have an impact on the economy and prices", he said the BoJ would "consider easing policy" if necessary.  

There were no Japanese economic data in the last 24 hours. The trade figures for January come out tonight.

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