Markets were deprived of tier-one US macro data last week, in part due to the government shutdown which President Trump, somewhat surprisingly, announced on 25th would be suspended for three weeks. The Dollar, which had been very stable, weakened 0.5% on Friday and has since remained on the back foot.
The Euro was broadly unchanged, despite the release of weak German IFO business climate, ISM manufacturing and ZEW economic sentiment data and a dovish press conference by ECB President Draghi following Thursday’s policy meeting.
Sterling was the star performer last week, gaining over 2% in trade-weighted terms to its highest level since mid-October. Financial markets seem to be increasingly discounting the risk of the UK leaving the EU without a deal on 29th March even if there is still a great deal of uncertainty as to what will happen next on the Brexit front.
The Kiwi Dollar, which had been under pressure since mid-December, appreciated nearly 1% with markets seemingly pleasantly surprised that CPI-inflation was unchanged in Q4 at 1.9% yoy. The Swiss Franc and Australian Dollar were marginally weaker last week.
