ews that Mexico and Canada would be exempt from Donald Trump’s steel and aluminum tariffs boosted both the Peso and the Canadian Dollar, while the announcement of a meeting between North Korean dictator Kim Jong-Un and President Trump buoyed the South Korean Won. G10 currencies behaved as one would expect during a risk-on environment, with the Swiss Franc and the Japanese Yen as the worst performers and the Australian and New Zealand Dollars as the best. Sterling, the Euro and the US Dollar ended the week more or less where they had started it.

This week is relatively light in terms of economic data, although the inflation report from the US on Tuesday will be the last critical piece of information before the Federal Reserve’s March meeting next week and could receive some attention.

Major currencies in detail

GBP

Sterling took some comfort from the better-than-expected business activity services PMI last week. The index rose back to a four month high 54.5 in February following an underwhelming performance in January that saw the measure slip to its lowest level since the aftermath of the Brexit vote.

In the absence of any significant news from Brexit negotiations, the positive data was enough to push the Pound modestly higher against both the Euro and the Dollar. This week looks like a quiet one as well, barring Chancellor Philip Hammond’s spring statement on Tuesday morning, and Sterling should be driven mostly by developments elsewhere.

EUR

The news that a Grand Coalition government had been agreed in Germany was cancelled out by the populist advance in the Italian elections, leaving the Euro trading listlessly at the beginning of the week.

As for the ECB meeting on Thursday, traders reacted positively to the surprise removal of the line in the statement that the bank could increase its asset purchasing programme should the outlook become less favourable. President Draghi’s dovish comments on weak inflation, a strong Euro and threats from protectionism were, however, enough to reverse earlier gains and the common currency ended the week mostly unchanged.

As in the case of Sterling, this week’s calendar is quite light, with only industrial production numbers to guide trading in the Euro.

USD

Fears of a global trade war receded somewhat after the US clarified that Mexico and Canada would be exempt from steel and aluminum tariffs and other exemptions would be considered as well.

Meanwhile, the employment report on Friday showed very strong levels of job creation that are having the effect of calling new entrants into the labour force pool; the unemployment rate and wages are not moving much, with wage increases running still comfortably above inflation. All in all, the report is consistent with three or four interest rate hikes in 2018.

The latest US inflation report on Tuesday will provide more information this week on one of the more critical factors driving Federal Reserve hikes in the quarters ahead.