At the beginning of last week (w/c 13 April), it looked for a while as though the US dollar was preparing itself for another assault on its mid-March high against the euro.
On Monday, it did indeed achieve a fresh 12-year high, and a five-year high against sterling, but it was not a conclusive break and the dollar retreated. The following day, the dollar looked even less convincing.
The game was over on Tuesday, when US retail sales increased by less than forecast. The 0.9 per cent monthly increase was by no means awful, but it was disappointing enough to sap the resolve of the dollar bulls. The dollar spent the rest of the week on the retreat, ending up as the worst performer among the major currencies.
Unusually, the US and Canadian dollars were at opposite ends of the table. Even more unusually, it was the Bank of Canada that sent its currency higher. The central bank surprised investors when it said in its statement 'the current degree of monetary policy stimulus remains appropriate.' The comment dispelled the notion that the Bank was inclined towards lower interest rates, so investors bought the 'Loonie'.
Sterling had a satisfactory week, strengthening by an average of 0.3 per cent against the other dozen most actively-traded currencies.
Investors were not unduly perturbed to see UK inflation stuck at 0.0 per cent, because the reading was similar to inflation rates of -0.1 per cent or 0.0 per cent in Euroland, the United States and New Zealand. There is still a degree of nervousness about the general election, though: investors are as unenthusiastic about the prospect of a referendum taking Britain out of the EU as they are about the possibility of an anti-austerity rainbow coalition blowing out the budget deficit.