Although there were no salient US economic data on Friday there was no shortage of rumour and comment about trade, North Korea and monetary policy. Taken together they tended to paint a more optimistic picture of the future, therefore leading to less call for the USD's safe-haven qualities. It was the weakest among the major currencies, albeit not by much.
The presidents imminent meeting with Kim Jong Un generates more enthusiasm within the White House than outside. It is nevertheless a good thing that the two leaders are talking. On trade, the president's extension of China's deadline indicates that he is keener to reach a settlement than to escalate the war. On monetary policy, Fed leaders' comments avoided any suggestion of renewed tightening.
Subsequent to Friday's inflation figures there have been no economic data from the euro zone. The EUR was unable to make headway on the back of the reduced geopolitical and trade tensions which held back the USD because it, too, can in many ways be considered a safe-haven. In France the gilets jaunes continued to stage their weekend protests but investors have become accustomed to the events.
The EUR squeaked a 0.1% gain against the USD but the cheers were understandably muted. It is up by 0.25% compared with a week and a month ago.
Investors were less interested in the fact that Canadian retail sales fell 0.1% in December than they were to notice that they had been forecast to fall by three times that much. The Loonie actually moved higher following the news.
Arguably, the CAD's underlying direction was shaped by the lighter tone on trade in Washington. It was moving ahead before the sales data came out and it continued to do so afterwards. A 0.5% increase in oil prices was irrelevant; trade optimism was what mattered. The CAD strengthened by 0.7% against the USD.
With no UK ecostats to inform them, investors had to rely on the Brexit narrative when forming their opinion of sterling. They seemed to like what they heard, as the GBP strengthened by 0.5% against the USD.
Over the weekend the Brexit debate moved on from whether B-Day would be moved back from March 29 to how far it might be pushed down the road. The prime minister will not put her revised withdrawal proposal until March 12, leaving insufficient time to prepare for departure. The current speculation is that departure could be postponed until 2021. A vote in the House of Commons on Wednesday could shed more light on that, if it gives parliament the power to prevent a no-deal Brexit.
The coincident index and the leading index were the two Japanese data on offer this morning. Both were about half a point lower on the month, at 101.8 and 97.5. Investors seemed relaxed about the numbers, as the JPY edged higher after their release. It is 0.1% higher on the day.
As a safe-haven currency the yen was held back by the rumored progress on Sino-US trade. But the USD was held back more.