The administration has announced its latest foray into the trade war waters. It will "expand its ability to penalize countries that manipulate their currencies". At face value that does not sound too scary but the argument that Germany is keeping its currency deliberately weak in order to boost exports to the States is at best misleading: Germany itself has no control over the value of the euro and even the European Central Bank makes no effort to set its value. The concern is that the administration will use its new powers to further impede trade.
Thursday's US economic data were not helpful to the USD. Continuing jobless claims were more than forecast, initial claims fewer. New home sales fell 6.9% in April. The provisional purchasing managers' index readings fell well short of target: At 50.6 and 50.9 they were only barely into the expansion zone above 50. On average the USD was just about unchanged against the other majors.
Euro zone economic data were entirely absent from this morning's agenda. The political arena was quiet too: with European elections ongoing into the weekend politicians are obliged to avoid making comments that might upset the proceedings.
In the late morning yesterday the EUR took a quarter-cent tumble for no clear reason. It was quickly reversed and the euro moved higher through the afternoon before flat-lining overnight. The EUR is 0.4% higher on the day against the USD.
The CAD moved broadly in line with oil prices, lagging WTI crude as it fell 6% and lagging it again as it recovered a third of that loss. Overall the Loonie is unchanged against the USD.
Wholesale sales for March was the single Canadian statistic. The 1.4% monthly increase was appreciable better than the forecast 0.9% rise and was briefly helpful to the CAD. There was no follow through though: the same spike that sent the USD higher against the EUR took the CAD lower too.
Prime minister Theresa May announced this morning that she will step down on June 7. The move was widely anticipated and had no effect on the GBP. The pound is 0.5% firmer on the day against the USD but most of the move took place during Thursday morning.
UK retail sales data this morning were overshadowed by the prime minister's appearance. They were, however, better than expected. The anticipated decline failed to materialize: sales were flat on the month and 5.2 higher on the year.
As the trade war rumbles on the yen continues to benefit from its safe-haven status. It strengthened through much of the New York session and held onto its gains overnight to start today 0.5% ahead against the USD.
There was minimal reaction to the Japanese data released overnight. Headline inflation accelerated from 0.5% to 0.9%. The all-industry activity index, a sort of monthly GDP check, fell by more than forecast to -0.4%.