Chris Redfern Moneycorp

As the exchange rate movements show, last week was broadly a time of relaxation among investors.

The commodity-related currencies did well and the safe-haven yen fell behind. One reason for the commodity currencies' advance was the better-than-expected reading for Chinese gross domestic product, which grew by 1.9 per cent in the third quarter. Although the annualised 7.3 per cent expansion was below Beijing's 7.5 per cent target, it came as a relief to investors who had feared a lower number.

The aberration was the New Zealand dollar, which fell to the foot of the table in short order on news that NZ inflation had slowed from 1.6 per cent to 1.0 per cent in September. Whatever thoughts the Reserve Bank of New Zealand might have had about raising interest rates would surely have been scuppered by such a low reading.

The euro took a hit when Reuters reported that the European Central Bank is considering buying corporate bonds as part of its stimulus strategy. Were it to do so, the ECB would have far more opportunity to print money because the available pool of corporate bonds is much deeper than for the asset-backed securities it is buying at the moment.

Although the ECB said there was no truth in the rumour, the damage was done.

There was some help for the euro this Monday morning though, when the ECB published the results of its 'stress tests' on European banks. Paradoxically, because a dozen banks failed the test and will need to raise more capital, investors trusted these tests more than they had the previous two rounds.

Sterling had a week of mixed fortunes. Retail sales, factory orders and mortgage approvals all disappointed, but third-quarter UK economic growth came in at 0.7 per cent, in line with forecast. The only ecostats likely to trouble sterling this week will be for retail sales, house prices and mortgage approvals.