In an impressive return to form the euro left the rest of the major currency field eating its dust.
It gained two US cents and went up by three cents against sterling as investors savoured the sensation that Greece would be out of the headlines for a while.
There was nothing among the ecostats to justify the euro's renaissance: The only data of any note were Friday's provisional purchasing managers' index readings and they were, at best, ordinary. It was sentiment, not statistics, that drove the rally.
As investors' benevolence towards the euro increased, their appetite for sterling and, to an extent, the US dollar, ebbed. The pound received some help from a reduction in UK public sector borrowing.
It also got a boost from the Monetary Policy Committee minutes, which implied that the committee might become more hawkish now that Greece's immediate future has been resolved. But an unexpected decline in UK retail sales pulled the rug from under sterling's feet.
The Aussie's weak performance was due in large part to the Reserve Bank of New Zealand, which made the widely-expected cut to its benchmark interest rate. The Kiwi actually strengthened on the news because the RBNZ statement no longer described it as grotesquely overvalued.
However, the NZ cut led investors to imagine that the Reserve Bank of Australia might have similar ideas.
The rand suffered a different fate. A rate increase by the South African Reserve Bank was seen as too little too late. The currency was also hurt by a five-year low for gold and a 13-year low in the broad-brush Bloomberg commodity index.
No comments yet