What moved
The week was the Australian dollar against the franc. AUD/CHF was the biggest move among the 28 pairs, and the franc was on the losing side of four of the six biggest. The Aussie also gained against the US dollar and the euro.
| Pair | Monday to Monday |
|---|---|
| AUD/CHF | +1.03% |
| AUD/USD | +0.89% |
| NZD/CHF | +0.75% |
| CAD/CHF | +0.75% |
| EUR/AUD | -0.72% |
| CHF/JPY | -0.70% |
Against the basket of the other seven, the Australian dollar led, with the New Zealand dollar and the Canadian dollar close together behind it. The Swiss franc finished last, the US dollar seventh and the euro sixth. The yen was the only defensive currency that ended in the plus.
| Currency | Against the basket |
|---|---|
| Australian dollar | +0.51% |
| New Zealand dollar | +0.24% |
| Canadian dollar | +0.23% |
| Japanese yen | +0.19% |
| British pound | -0.08% |
| Euro | -0.21% |
| US dollar | -0.38% |
| Swiss franc | -0.51% |
Risk sentiment: off, then nearly neutral, then off again
Our risk sentiment reading, the heaviest of the four pillars at 40, opened Tuesday at -21. The week before had ended with a slide in tech stocks, and the S&P 500 was still down 1.5% over five days at Monday's close. On Wednesday morning the reading was -13.
It turned slightly positive on Thursday morning, at +8, after a calm Wednesday with the VIX around 16.7. It did not last. US stocks fell on Thursday, the S&P 500 by 1.2% and the Nasdaq 100 by 2.6%, the VIX went back to around 19, and Friday morning stood at -10.
The currencies did not follow the textbook. In a risk-off week the franc should hold up and the Australian dollar should struggle, and the opposite happened. The yen did get some of the defensive bid and ended fourth. The franc, the haven with a policy rate of 0%, got none of it.
The central banks
No central bank changed its rate this week. The Fed was in its quiet period, and five banks decide this week instead. What came out were words, and a survey.
- Kent of the RBA called financial conditions somewhat restrictive on Monday, according to market reports.
- Hauser of the RBA said during the week that oil had made the inflation outlook worse than the bank thought, also according to market reports. The Australian dollar led the basket from Tuesday on.
- The Bank of Canada published its Business Outlook Survey on Monday, ahead of its decision on 28 October.
- The Fed stayed silent before its decision of 28 October. When it last met, on 16 September, it raised its range to 3.75 to 4.00%, as its statement shows.
Every rate and every next meeting is on the central banks page.
Geopolitics and the data
Britain had the busiest week. The UK labour market report on Tuesday put unemployment at 4.7% for June to August, against 5.0% expected, with regular pay growth at 3.7% (ONS). UK CPI on Wednesday came in at 3.5% for September against 3.4% expected, up from 3.1% in August, with motor fuels the largest upward contribution (ONS). On Friday UK retail sales fell 0.4% on the month (ONS). The pound finished in the middle, at -0.08%.
Canada CPI on Monday was 3.1% for September against 3.2% expected (Statistics Canada). New Zealand CPI late on Wednesday showed 3.7% for the third quarter, against 3.8% expected and 4.1% in the second quarter (Stats NZ). The New Zealand dollar slipped on the figure and still finished second.
Japan CPI early on Friday put core inflation at 2.1% for September, up from 1.7% in August, and the measure without fresh food and energy at 2.4% (Statistics Bureau of Japan). That came a week before the Bank of Japan meets. In the US the week was nearly empty: housing starts fell 5.2% in September to 1.221 million (Census Bureau).
Oil was again the line from geopolitics. WTI fell on Monday, partly on hopes of de-escalation in the war around Iran, and was around 98 dollars by Wednesday evening. It climbed back to around 103 dollars by Friday's close. That helped the Canadian dollar into third place with Canadian figures close to expectations.
What the research said, and how it went
The three setups and what they came to are in the table at the top of this page: four calls, 3 of 4 the expected way, -0.08% together. The week before, the setups with our mark came to 0 of 5 and -3.05%, so the hit rate recovered even if the total did not. The setups in the list without our mark did worse this time, at 2 of 7 and -0.71%. There was no list on Monday, and on Friday none of the setups carried our mark. The running record is on the track record.
The Australian dollar was read right. Long AUD/CHF carried our mark on Thursday morning and gained +0.31% to Friday. The same pair without our mark had lost -0.64% from Wednesday to Thursday, and gained +0.58% from Friday to Monday. The direction held over the week, at +1.03% Monday to Monday; the timing inside it was rough.
The dollar was read wrong. It went into the week ranked first and stayed there every morning, while the price kept lagging. Long USD/CHF gained +0.03% from Tuesday to Wednesday and then lost -0.45% from Wednesday to Thursday, with no US data to lean on and the Fed in its quiet period. Short EUR/USD added +0.03% on Tuesday. The dollar finished seventh of the eight at -0.38%.
The ranking did better than the setups. The first currency beat the last on 3 of 4 mornings. The yen, ranked third on Tuesday, finished first from there at +0.40%. The euro, ranked fifth, finished last at -0.32%, and the US dollar, ranked first, finished fourth at -0.12%.
This week
- Wednesday: Australia CPI at 01:30 Amsterdam, the RBNZ decision at 02:00, the Bank of Canada decision at 14:45 and the Fed decision at 19:00.
- Thursday: US GDP and PCE at 13:30 and the ECB decision at 14:15.
- Friday: Tokyo CPI at 00:30, eurozone GDP at 11:00, Canada GDP at 13:30 and German CPI at 14:00. The Bank of Japan decides the same day.
Five central banks in three days. Wednesday carries most of it: Australian inflation comes six days before the RBA meets, and the RBNZ, the Bank of Canada and the Fed all decide that day. Every date and time is on the calendar.