Little reaction

Steady as you go

As Yoda might have put it, "not a lot going on there was" in the FX market over the long weekend. The South African rand strengthened by 0.5%, the Canadian dollar and Swedish krona were down by a little more than that and the rest milled around in between. 

It was not that there was any shortage of tradable news or events. America dropped a record-breaking bomb on Afghanistan. North Korea threatened America with a pre-emptive nuclear strike, despite the failure of another missile test. Turkey's electorate voted narrowly to confer more power on the presidency. Macron (24%) and Le Pen (23%) led the opinion polls for the French presidential election with Fillon (20%) and Mélenchon (18%) close behind.
Yet investors resolutely refused to be rattled. The safe-haven Japanese yen, which might have been expected to benefit from any unease, actually weakened on Monday.

Slower in the States

The US ecostats were a disappointing bunch. Retail sales and consumer prices were both lower in March, the New York Fed's manufacturing index was down by 11 points in April and the NAHB housing market index, a barometer of building activity, dropped three points to 68. Yet the dollar was unchanged.

A -0.3% fall in the US consumer price index took the headline rate of inflation down from 2.7% to 2.4% and retail sales were -0.2% lower on the month. The dollar did dip on the news, and it lost further ground as a result of the NY Fed's manufacturing index, but its net loss was minimised by gains it had made earlier on Thursday. 
The first reaction to the Turkish constitutional referendum was to mark up the lira but there was no follow-through. It is a net -1.2% lower against sterling over the long weekend. The pound itself is an average of 0.2% higher, its only loss being to the rand. The euro and Swiss franc are down by a third of a cent each.

Warming up?

It will be interesting to see whether investors can remain quite so sanguine for the remainder of the week. Already this morning they have shown some inclination to get involved, selling the Australian dollar after the Reserve Bank of Australia board meeting minutes indicated a more dovish attitude to monetary policy.

The RBA minutes revealed increased concern about the labour market. It cost the Aussie a cent this morning, negating the gains made on Thursday which came, ironically, as a result of stronger-than-expected employment data.
Today's other ecostats hold no great promise for would-be market movers. There is nothing at all from Europe. US data cover housing starts, building permits, industrial production and capacity utilisation. Canada reports on international portfolio investment flows and GDT publishes its index of milk prices, a figure that can affect the NZ dollar in particular. Ticking over in the background will be the tensions surrounding North Korea and, by extension, China. The hottest topic will be the French opinion polls.