The dollar made most of the running on Thursday, once again mainly because as investors considered the EUR, the GBP and the allegedly risky "commodity" currencies the USD ticked the box for "none of the above". It strengthened by 0.4% against the EUR. The US economic statistics were fairly neutral. Pending home sales were slightly down in September, mimicking the performance of new and existing home sales. The wholly unpredictable durable goods orders were better than forecast overall; worse than forecast when stripped of trains and boats and planes. The president will not be delighted that the trade deficit widened again, as imports increased faster than exports.
The euro had two problems to contend with; weak sentiment in Germany and a mixed message from the European Central Bank. IFO's survey of German companies found them less upbeat about the current situation and the future. The ECB president did his best to tell a bullish story at his press conference, downplaying economic risks and offering reassurance about the inflation outlook. However, reading between the lines, investors sensed a concern about Italy. On one specific the ECB president was clear: the bank would only buy Italian government bonds if the country were to seek a bailout from the EU. The EUR fell following the press conference.
Investors saw no sign of the CAD on their radar. Canadian statistics were non-existent and the Loonie had to share the fate of its Commonwealth cousins in Australia and New Zealand. All three were lower on the day, the CAD losing 1.0% to the USD. Investors were put off the supposedly risky "commodity" currencies by a general increase in volatility and the Loonie's particular case was not helped by a downturn in oil prices.
The pound did nothing wrong on Thursday but it was still one of the worse performers. Perhaps most worryingly for supporters of the GBP (for there still are some, allegedly), when the EUR headed south following the ECB press conference the GBP meekly followed it lower. The latest bit of bad news, published in London this morning, is the result of research by the National Institute of Economic and Social Research. It concludes that a no-deal Brexit would cost the treasury £30bn over the next five years. The GBP lost 0.7% on the day to the USD and is 1.7% lower on the week.
Having initially lost ground in New York the JPY strengthened into the afternoon and overnight. Its progress was inversely correlated with US equity prices, which followed an almost identical trajectory: DJ30 down= JPY up and vice versa. Data released last night showed Tokyo CPI inflation accelerating slightly to 15% but the news had no impact on the JPY.