he catalysts were the Fed minutes on Wednesday and the US payrolls report for March on Friday. During its most recent meeting, Fed officials were focused on whether and when to start the process of winding down the massive stock of Treasury and mortgage bonds piled up by the central bank as a consequence of its quantitative easing programme, which took markets somewhat by surprise.

Last week also saw some big moves in emerging market currencies on idiosyncratic factors. The Czech Koruna rallied by about 2% against the Euro as the central bank removed its Euro peg earlier than markets expected. By contrast the South African Rand and Turkish Lira fell by over 2%, the former on the dismissal of the respected Finance Minister Gordhan, the later on geopolitical jitters after the US bombed a Syrian airfield.

Next week we get a batch of inflation releases in the US, UK, China, Sweden, Norway and Poland. By next weekend we will have a better sense of the sustainability of the modest pickup in inflation worldwide.

Major currencies in detail

GBP

We had mixed reports out of the UK economy last week. February industrial production was a disappointment, down on the month and up just 2.8% on the year versus expectations of close to a 4% increase. However, the more timely PMI surveys of business conditions for March rose significantly on the back of a strong service sector reading. Markets chose to focus on the negative, and Sterling underperformed every G10 currency except the Australian Dollar.

This week’s UK inflation report is particularly important as the Bank of England has been surprising markets with its hawkishness. Market expectations of hikes remain remarkably low, and another jump in core inflation could trigger a significant realignment in interest rate markets that would provide strong support for Sterling.

EUR

Though there were no critical releases last week in the Eurozone, ECB policymakers kept the common currency on the back foot as they pushed back on expectations of early rate rises.

Next week sees the official start of the French presidential campaign. The data calendar is fairly light, so expect to see traders focused on the polls in France, which so far continue to indicate almost no chance of a second-round victory by the National Front candidate.

USD

The payroll reports came out mixed but the markets chose to focus on the positive. The establishment survey of workplaces disappointed, showing net job creation in March of just 98,000 and some negative revisions to prior months. However, the household survey contradicted this pessimism, showing sharp drops in all definitions of unemployment and wage growth holding at 2.7% from a year ago.

As in the UK, focus next week will be on the inflation numbers. Another jump of the core number of more than 0.2% on the month should bring about the possibility of four hikes in 2017 and support the Dollar.