Europe doesn't decide


Perhaps because of the imminent Memorial Day weekend the USD did not see a lot of action on Friday. It saw even less on Monday, with the world's two biggest financial centers - London and New York - taking the day off. Any damage done on Friday was repaired in the Far East early yesterday. From Friday to this morning it is unchanged against its main bellwether, the EUR.

Friday's damage was mainly the result of unhelpful durable goods orders data. All of the measures were below forecast, either unchanged or lower on the month. Nondefense orders ex aircraft - the preferred barometer of underlying private sector activity - were down by 0.9%. The US president's comments during his visit to Japan served more to confuse than to illuminate the trade war situation: "They would like to make a deal. We're not ready to make a deal."


The European elections went roughly as the opinion polls had predicted. Broadly, the traditionally-large center-left and center-right parties lost ground to the traditionally-small anti-establishment and nationalist groups.  

There were no euro zone economic data on Monday. This morning Germany's Gfk reported a slight softening of consumer confidence while in France the INSEE confidence measure improved by three points to 99. The European Commission's confidence criteria were mostly better than forecast. Today's developing story relates to Italy's deficit budget and action that could possibly be taken by the EU against the Rome government.


The Canadian dollar took advantage of Memorial Day for some R&R of its own. It is unchanged against the USD today from its position on Friday morning.  

Oil prices went almost nowhere; WTI crude is 0.3% higher over the four days. There were no Canadian economic data on Friday or Monday and there are none on today's agenda either.


In light of the political developments in Britain it might seem surprising that the GBP is virtually unchanged against the USD from Friday morning. The two major political parties, Conservative and Labour, suffered losses in the EU elections as the pro-Brexit Brexit party and the pro-remain Liberal Democrats took first and second place. At the time of writing there are nine candidates to replace Theresa May as prime minister, of whom Boris Johnson is favorite with the bookies, if not with investors.

Friday's mixed UK retail sales data were inevitably outweighed by Theresa May's announcement. The "official" figures were better than expected in April, flat on the month rather than falling as predicted, while the CBI's Distributive Trades Survey for May was significantly below forecast at -27%. 


The Bank of Japan's corporate service price index went up by 0.9% in the year to April. The increase was close enough to the forecast 1.1% that investor did not notice the difference. Over the four days the JPY is 0.2% firmer against the USD.

When BoJ governor Haruhiko Kuroda spoke on Monday at a seminar ahead of next month's G20 meeting he expressed caution about the global economy. Kuroda San named the usual suspects: trade friction, slower growth in China and Brexit. He said nothing to affect the JPY.

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