And the winner is…
There was no doubting the victor of Tuesday's FX shoot-out. The euro trounced the rest of the field, adding more than one US cent. It strengthened by an average of 0.8% against the other dozen most actively-traded currencies and against the pound.
The euro set off higher even before London opened and it continued to move ahead against the US dollar throughout the day, coming to a halt only at six o'clock when the City had packed up and gone home. Two things contributed to its advance. First was the technical picture. The euro broke through the support/resistance level at around $1.1670 that had held good since July. It then went on to crack the downtrend that had constrained it in September and October.
The second factor in the euro's favour was a decent set of Euroland ecostats. Third quarter growth was steady at 0.6% and ZEW's survey of investor sentiment jumped four points to 30.9. The euro's gains against sterling were less cut and dried but it still took a cent off the pound, bring its tally for the week to two cents.
At the bottom of the rankings the Australian dollar lost half a US cent and dropped a cent and a half against sterling. There, too, technical factors played a part but more important was a shake-out in commodity, equity and energy prices that contributed to a broad risk-off attitude.
On the oil front doubts emerged about the commitment of Russia to capping oil production. At the same time a story did the rounds about North American oil sands and fracking producers and their ability quickly to compensate for any shortfall in OPEC output. Tuesday morning's weaker-than-expected Chinese ecostats contributed to the idea that demand for Australia's coal and iron ore exports could wane.
Sterling stuck to the middle ground and, on average, was unchanged on the day. The UK inflation figures gave it some pause for thought though: consumer price inflation was steady at 3.0% in October, having been expected to tick up to 3.1%. However, after due reflection investors came to the conclusion that the narrow miss would have no material impact on interest rates or the economy.
UK jobs and US prices
This morning's UK employment data will be important not because of what they signify for Bank of England monetary policy but on account of their implications for the economy, especially consumer spending. The US inflation figures will be seen as an important pointer to next month's Federal Reserve rate decision.
Whether consumer price index inflation is at 3.1% or 3.0% (and RPI at 4.1% or 4.0%) matters little if earnings are only rising by 2.2% a year. Investors will be unimpressed if today's numbers do not show that gap narrowing.
The US inflation data come out at the same time as October's retail sales. They will be the last such figures to appear before the Fed rate decision on 13 December.