- Sterling finishes week ahead.
- Euro ascendancy slows.
- Dollar rises as North Korea worries fade.
- Gold eases..
GBPUSD 1.3183 GBPEUR 1.0989 EURUSD 1.1996 USDCAD 1.2137 GBPINR 84.25 GBPAUD 1.6411 GBPAED 4.8431
- The pound saw a modest gain on balance last week. Stronger-than-expected manufacturing production figures released on Friday provided a boost although data impulses from earlier in the week were to the downside after construction and service sector PMI fell short of expectations. Brexit negotiations also appear to have stuttered with EU Brexit Minister Barnier criticising the UK’s approach to Ireland. A letter from the EU parliament also warned that it is more than likely the assessment on sufficient progress is unlikely to have been met by the October. For the week, the pound gained 1.9% versus the US Dollar and 0.4% versus the Euro but lost 0.4% versus the Yen.
- The Euro was mixed last week. Thursday’s ECB meeting was the main focus for investors where the Governing Council maintained their existing policy stance overnight. The Euro exchange rate got plenty of attention in the presser with Draghi noting that recent volatility represents a source of uncertainty which requires monitoring. It was also blamed for the lower inflation forecasts with the 2018 and 2019 estimate cut by one-tenth to +1.2% and +1.5% respectively. The mild jawboning failed to dampen the Euro however with the single currency rallying during the course of the press conference and extending to a fresh two-and-a-half year high against the US Dollar on Friday. For the week, the Euro gained 1.5% versus the US Dollar but lost 0.4% versus the pound and 0.8% versus the Yen.
- Whilst we have seen modest gains for the U.S. dollar this morning, last week saw the greenback fall against all the G10 currencies, tracking losses in US government bond yields as the ten-year borrowing cost fell to a fresh post-election law. The bulk of losses came towards the end of the week as investors began to contemplate the economic impact of hurricanes Harvey and Irma. Geopolitical concerns also played their part as the jawboning between the US and North Korea continued after the North Korean nuclear weapon test. At the Fed, dovish remarks from Brainard on Tuesday provided a weight as she called for a cautious approach to tightening policy. New York Fed Governor Dudley followed on Friday and Fed watchers have argued he offered a slightly less hawkish tone. For the week, the Dollar Index lost 1.6%. Against other G10 currencies, the US Dollar lost 1.5% versus the Euro, 1.8% versus the pound and 2.2% against the Japanese Yen.