Coronavirus Lockdowns and US Political Uncertainty Propel the US Dollar Higher

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EUR – Euro Battered as France and Germany Impose New Lockdowns 

The Euro found itself on the back foot this week, being driven lower by record coronavirus surges in Germany and France, which resulted in the bloc’s two largest economies reintroducing lockdown measures. The European Central Bank (ECB) then kept the pressure on the single currency as it warned of downside risks to the Eurozone and hinted it may take action in December.

With more European lockdowns on the horizon, it’s likely the Euro may struggle to attract investors next week, particularly if Germany’s latest industrial figures indicate the country’s vital manufacturing sector is slowing.

Top EUR data releases:

Nov 5 EUR German Factory Orders (Sep)

Nov 5 EUR Retail Sales (Sep)

Nov 6 EUR German Industrial Production (Sep)

 

USD – US Dollar Surges in Gloomy Trade

The US Dollar was back in vogue this week, with investors flocking to the safe-haven currency amidst a sharp sell-off in equity markets amidst heightened coronavirus and US political uncertainty. Further supporting the ‘Greenback’ was the latest US GDP report as economic growth saw a record jump in the third quarter. 

Looking ahead, it’s set to be a busy week for USD investors next week, with the US election, a Federal Reserve rate decision and US payroll report all on the agenda. The election will of course be the highlight, and a drawn out result process could send the US Dollar even higher.

Top USD data releases:

Nov 3 US Presidential Election

Nov 5 Fed Rate Decision

Nov 6 Non-Farm Payrolls (Oct)

 

GBP – Pound Supported by Cautious Brexit Optimism

The Pound found some support this week on the back of rising hopes for a UK-EU Brexit trade deal, as the extension of negotiations over the weekend was viewed positively by GBP investors. However, tempering these gains somewhat were concerns that a spike in UK coronavirus related deaths could prompt a second national lockdown.

In focus for GBP investors next week will be the Bank of England’s (BoE) latest rate decision. Will increasing the size of its quantitative-easing programme help to boost the Pound?

Top GBP data releases:

Nov 4 Services PMI (Oct)

Nov 5 Construction PMI (Oct)

Nov 5 BoE Rate Decision

 

AUD – Australian Dollar Plunges in Skittish Trade

The Australian Dollar fell back this week, with appetite for the risk-sensitive currency plummeting amidst the sharp souring of market sentiment. This gloomy mood saw gains from a positive third quarter inflation reading quickly evaporate.

Turning to next week, the focus for AUD investors will undoubtedly be on the Reserve Bank of Australia’s (RBA) latest policy meeting, in which the bank is widely expected to slash interest rates to a new record low of 0.1%.

Top AUD data releases:

Nov 3 RBA Rate Decision

Nov 3 Services PMI (Oct)

Nov 5 Trade Balance (Sep)

 

ZAR – Rand Tumbles in Response to Lacklustre Budget 

The South African Rand dived this week as South Africa’s mid-term budget failed to convince investors that the government has a roadmap with how to avert a looming debt crisis. Alongside wider market concerns, this saw investors largely shun the Rand.

Looking ahead, the risks to the Rand are likely to remain tilted to the downside next week as coronavirus and US political uncertainty are set to dominate market sentiment. 

Top ZAR data releases:

Nov 2 Manufacturing PMI (Oct)

 

CAD – Canadian Dollar Slumps as Oil Prices Tumble

The Canadian Dollar came under some significant pressure this week as the commodity-linked currency was knocked by a collapse of oil prices. These losses were compounded by the Bank of Canada (BoC) as it warned Canada’s economic recovery is expected to slow ‘markedly’ in the fourth quarter.

Looking ahead to next week’s session, the focus for CAD investors looks to be on Canada’s latest jobs report. Will another fall in the unemployment rate in October help to bolster the Canadian Dollar?

Top CAD data releases:

Nov 4 Trade Balance (Sep)

Nov 6 Unemployment Rate (Oct)

Nov 6 Ivey PMI (Oct)