What moved
The week came down to the yen. Five of the six biggest moves among the 28 pairs were the yen falling, and the sixth was the franc falling against the Australian dollar.
| Pair | Monday to Monday |
|---|---|
| AUD/JPY | +0.83% |
| GBP/JPY | +0.66% |
| AUD/CHF | +0.65% |
| NZD/JPY | +0.65% |
| EUR/JPY | +0.52% |
| CAD/JPY | +0.52% |
Against the basket of the other seven, the Australian dollar led from Monday to the end. The middle of the table was flat: the euro, the Canadian dollar and the US dollar all finished within a few hundredths of zero. The Swiss franc and the yen were the only two that lost ground.
| Currency | Against the basket |
|---|---|
| Australian dollar | +0.35% |
| British pound | +0.17% |
| New Zealand dollar | +0.17% |
| Euro | +0.04% |
| Canadian dollar | +0.04% |
| US dollar | +0.02% |
| Swiss franc | -0.30% |
| Japanese yen | -0.48% |
Risk sentiment: from mildly off to on
Our risk sentiment reading, the heaviest of the four pillars at 40, started the week at -6 on Monday, mildly risk off. It rose to +15 on Tuesday and +27 on Wednesday, when the mood turned to risk on. It peaked at +31 on Thursday and stood at +26 on Friday. Equities did most of the lifting, with the S&P 500 at a record close on Friday and the VIX below 15.
That shape is what the basket shows. The Australian and New Zealand dollars, the currencies that need confidence, finished first and joint second with sterling. The yen and the franc, which a nervous market buys, finished last. The franc had been the strongest of the eight the week before and gave much of that back.
The central banks
No central bank changed its rate this week. What came out was paper and speeches.
- The Fed published the minutes of its September meeting on Wednesday evening. Most participants saw another hike this year as likely and the inflation risks as tilted up, which was close to what the market already had in mind.
- The ECB's account of its September meeting came out during the week and cooled talk of a hike at the end of October.
- Bailey of the Bank of England spoke in Istanbul on Thursday and repeated the commitment to bring inflation down, without a signal for the meeting of 5 November.
Every rate and every next meeting is on the central banks page. Seven of the eight banks meet between 28 October and 5 November.
Geopolitics and the data
The data that moved a currency came on Friday. The Canada jobs report showed 68,000 jobs lost in September against about 9,200 gained expected, after 42,000 lost in August. Unemployment came in at 6.5%, as expected. The Canadian dollar was the weakest of the eight that afternoon and then recovered to finish the week flat.
In the United States the week was light. Jobless claims came in at 197,000 on Thursday, a low reading. The trade deficit for August widened to 105.6 billion dollars from 92.8 billion in July. Neither moved the dollar much, and it ended the week where it started.
Oil stayed the main line from geopolitics, with reports of attacks near the Strait of Hormuz on Wednesday. WTI went from around 89 dollars on Monday evening to above 92 dollars on Thursday afternoon and closed the week near 91. That helped the Canadian dollar through a bad jobs number. Over the weekend a Houthi attack hit Riyadh airport; by Monday morning there was no visible move in oil.
What the research said, and how it went
The five setups and what they came to are in the table at the top of this page: eleven calls, 8 of 11 the expected way, +0.32% together. That is less than the week before, when the setups with our mark came to 6 of 9 and +0.94%. The setups in the list without our mark did worse, at 1 of 4 and -0.32%. The running record is on the track record.
The yen was read right. Long AUD/JPY came into the list on Thursday, once the mood had turned, and gained +0.52% from Thursday to Friday and +0.02% from Friday to Monday. A strong Australian dollar on one side and a yen without haven demand on the other did the work. Long USD/JPY added +0.05% on its one morning with our mark.
The franc was read wrong at the wrong moment. Long USD/CHF gained +0.09% and +0.03% on Tuesday and Wednesday, and then lost -0.39% from Thursday to Friday. On Thursday American equities closed lower and gold rose, and the franc found buyers for a day. We found no Swiss release behind it. Long AUD/CHF had a similar start, at -0.07% and -0.18% on Tuesday and Wednesday, before it turned with +0.03% and +0.16%.
The ranking itself had a mixed week. The first currency beat the last on 3 of 5 mornings. The dollar went into the week ranked first and finished sixth at +0.02%, and the yen, ranked third on Monday, finished last at -0.48%.
This week
- Wednesday: US CPI at 14:30 Amsterdam.
- Thursday: the Australia jobs report at 02:30, UK GDP at 08:00, and US retail sales and PPI at 14:30 Amsterdam.
A fuller week than the last. American inflation on Wednesday is the main release, for a dollar that went nowhere last week and a Fed whose minutes kept another hike on the table. The Australian jobs report early on Thursday is the first real test for the currency that led the basket. Every date and time is on the calendar.