n the absence of any major monetary or economic news, currency markets took their cue from other risk assets and reacted according to script. Commodity currencies like the Australian and New Zealand Dollars and the Norwegian Krone suffered the most, while the USD rallied against every other G10 currency, save the safe haven Japanese Yen and Swiss Franc. The commodity sell-off also drove emerging market performance, with oil importers such as the Turkey Lira outperforming commodity exporters, particularly in Latin America.

Focus in the currency markets this week should remain entirely on political developments. The debate leading up to the UK Parliament vote on the Brexit deal agreed to by the EU and Prime Minister May will be key. The G-20 meeting this coming weekend, as well as any developments in the standoff between the Italian Government and the European Commission over the former’s budget will also be worth noting.

GBP

Economic headlines are being all but ignored by markets as we get closer to the Brexit moment of truth.

With the final draft agreement between Prime Minister May and the European Union finalised over the weekend, the drama now switches to the UK Parliament. Bookmakers put the odds of passage at slightly less than even, but the truth is nobody knows. Sterling took the news of the agreement on Sunday in stride, as it awaits the outcome of the vote. With little key news on tap out of the UK, Sterling will spend the next few weeks focused on the tallying up of votes for and against the agreement.

EUR

The Euro managed to keep its losses against the Dollar to a respectable level last week. Considering the bleak news out of the Eurozone, this was no small achievement.

The key PMI indices of business activity weakened yet again. The Composite index hit a 47-month low at 52.4, still signalling expansion, but confirming a worrisome loss of momentum. This, together with the lack of signs of any pick up in core inflation, means that our call for a first ECB hike in the third quarter of 2019 is at risk. Unless we see a meaningful rebound in these in December, we will be pushing our forecast further into the future, and our forecast for Euro levels downwards.

USD

As is often the case in the Thanksgiving holiday week, the Dollar mostly traded off events elsewhere. General market nervousness pushed it somewhat higher for the week.

This week should be little different. The main event will be the publication of the minutes from the last meeting of the Federal Reserve on Wednesday. Markets have taken out all but one of the rate hikes that were priced in for 2019, and there will be keen interest in finding out whether the Fed’s rhetoric justifies this softening.