he star of the week was, however, the New Zealand dollar, as the RBNZ broke ranks with other central banks and refused to validate market expectations for an interest rate cut, leaving its policy unchanged instead. The worst performing G10 currency was the Australian dollar, in what looked like forced unwinds of long AUD/NZD positions. Emerging market currencies were generally down, led by the Chilean peso that sold-off on political concerns.

Focus this week should shift back to macroeconomic data. The PMIs of business activity in the Eurozone out on Friday are the most critical data point. Some volatility may also be expected after the release of the minutes of the last Federal Reserve meeting on Wednesday and the ECB equivalent on Thursday.

GBP

A slate of macroeconomic releases on inflation, growth and the labour market came in at or slightly below expectations. The pound was, however, supported by the large lead that Conservatives retain over labour in the polls, which is boosted by the Brexit Party’s decision to pull out of certain elections to avoid splitting the right-wing vote.

While the experience of 2017 reminds us that there is plenty of time for Labour to close the lead, the most likely scenario, for now, is a clear Johnson victory and Brexit on terms not much different from the latest Withdrawal Agreement.

EUR

The news that Germany narrowly avoided recession and helped Eurozone growth outperform expectations were a boom for the euro and European currencies in general. Industrial production and labour data also came out better-than-expected.

The Eurozone economy looks set to skirt recession and resume growth, in line with our views. The PMI data out Friday is even more critical than usual, and we expect it to mark another solid improvement in conditions that should put to rest talk of any near term additional stimulus from the ECB. The common currency should benefit from this.

USD

Unlike the Eurozone, Economic news out of the US has been coming in weaker-than-expected, although nothing in the data leads us to worry yet about a sustained slowdown in growth.

Data out this week will be mostly second-tier, so traders will be scrutinising the minutes from the last FOMC meeting for clues as to the Federal Reserve’s next policy move. If Chair Jerome Powell’s comments from his semi-annual testimony to Congress last week are anything to go by then the Fed is likely to remain on hold for the foreseeable future.