After doing little during in the Far East session and during London's morning the USD picked up momentum as New York got into its stride. An on-target figure for new jobless claims and a decline in the number of continuing claims helped, but the upward move mainly represented a continuation of Wednesday's rally. It was well under way when the Federal Open Market Committee released its Monetary Policy Statement and sent it another half-cent higher. There was no surprise at the FOMC's decision to keep the funds rate unchanged but the tone of the statement was more hawkish than investors had expected. References to the declining unemployment rate and strong growth in household spending reinforced expectations of a rate hike next month.
Subsequent to the European Central Bank's reasonably bullish Economic Bulletin there were no further announcement or data to affect the EUR yesterday and there none on today's agenda either. An appearance by ECB president Mario Draghi at the Irish Parliament was entertaining but added little to the EUR debate. He defended himself against accusations that he had sent "ransom notes" and "diktats" to EU governments including Italy and Ireland but the meeting was a reminder that there is still bad blood in Ireland about the ECB's handling of the financial crisis eight years ago. The EUR is 0.8% lower on the day against the USD and just about unchanged against the GBP.
The CAD is down by 0.8% too, not because of its own shortcomings but as a result of USD strength. Although an eight-month low for oil prices did not help matters, a strong figure for Canadian housing starts in October helped to allay concerns. The CAD starts today 1.1% lower on the week against the USD, sharing last place with the JP among the majors.
Investors remain unable to constrain their optimism that a Brexit withdrawal deal is about to be agreed with the EU. Sterling was not the leader on Thursday: it lost four fifths of a US cent and fell by an average of 0.1% against the other major currencies. However, that was not a bad result, given that there is still no concrete sign of the much-talked-about withdrawal plan and no evidence that it will command support within the Conservative party, let alone in the House of Commons.
Economic data from Japan this morning was limited to money supply M2, which was up by an annual 2.7% in October. Investors were not inspired, and the JPY lost a further 0.1% to the USD. Looking ahead, two major banks have offered conflicting predictions for the JPY in 2019. JPMorgan says it could weaken to ¥125 per US dollar (currently ¥113.8) while Societe Generale describes it as "cheap", and looks for it to strengthen next year.