Pound Firms on Economic Optimism, US Dollar Jumps as US Treasury Yields Surge

Find out how the major currencies have been performing and what movement we could see in the days ahead with our weekly exchange rate update.  

 

EUR – Euro Slips on USD Rally

Following a strong start to the week after the Eurozone’s latest GDP estimate and German economic sentiment index printed above expectation, the Euro’s negative correlation with the US Dollar saw the single currency laid low through the rest of the session as the latter rallied.

Looking ahead to next week, Germany’s final GDP release may offer some support to the Euro if it confirms the Eurozone’s largest economy managed to avoid a contraction in the last quarter of 2020.

Top EUR data releases:

Feb 23 EUR Inflation Rate (Jan)

Feb 24 EUR German GDP (Q4)

Feb 25 EUR Economic Sentiment (Feb)

 

USD – US Dollar Rebounds amid Surging Treasury Yields

The US Dollar shook off some initial weakness this week to rally on the back of a sharp rise in US Treasury yields, which soared to a new one-year high. Further boosting the ‘Greenback’ was the publication of some impressive US retail sales figures.

The direction of US Treasury yields is likely to remain a key concern for USD investors next week, as is the latest durable goods orders figures, where a strong pick up in goods orders last month could help to buoy the US Dollar.

Top USD data releases:

Feb 25 USD Durable Goods Orders (Jan)

Feb 26 USD PCE Price Index (Jan)

 

GBP – Pound Bolstered by Vaccine Optimism

The Pound trended higher again this week, as the currency continued to be bolstered by the UK’s vaccination success and hopes this will allow for a strong rebound in the economy this year. Aiding the Pound’s ascent this week was also the news that Chancellor Rishi Sunak will defer plans for tax increases in next month’s Budget in favour of more fiscal support for the UK’s economic recovery.

In the spotlight next week, we have the publication of Boris Johnson’s long-awaited roadmap of how the government will lift the UK lockdown. Expect the Pound to weaken if GBP investors feel the pace of easing is too slow.

Top GBP data releases:

Feb 22 GBP Boris Johnson’s Lockdown Roadmap

Feb 23 GBP Unemployment Rate (Dec)

Feb 23 GBP Wage Growth (Dec)

 

AUD – Australian Dollar Dented by USD Strength

The Australian Dollar started strongly this week, before quickly giving back most of these gains as a rebound in the US Dollar tempered demand for the high-yield currency. However, AUD exchange rates were given another leg up in the latter half of the session following a larger-than-expected fall in domestic unemployment last month.

The publication of Australia’s latest wage price index will likely be the main focus for AUD investors next week, with another slowing of wage growth in the fourth quarter potentially dampening the appeal of the ‘Aussie’.

Top AUD data releases:

Feb 24 AUD Wage Price Index (Q4)

Feb 25 AUD Business Confidence (Feb)

 

ZAR – Rand Mixed amid Fluctuating Market Sentiment

The South African Rand traded in a wide range over the past week as the emerging market currency closely followed the fluctuations in market sentiment. On the domestic front, inflation in line with expectations offered limited support to the Rand.

Looking ahead to next week, all eyes will be on the publication of South Africa’s 2021 Budget. Will Finance Minister Tito Mboweni be able to reassure investors over the state of South Africa’s deteriorating finances?

Top ZAR data releases:

Feb 23 ZAR Unemployment Rate (Q4)

Feb 24 ZAR 2021 Budget

Feb 26 ZAR Trade Balance (Jan)

 

CAD – Canadian Dollar Underpinned by Surging Oil Prices

The Canadian Dollar enjoyed some robust support this week, as the appeal of the oil-sensitive ‘Loonie’ was bolstered by a sharp uptick in crude prices, which propelled WTI oil past $60 a barrel. However, the Canadian Dollar struggled to consolidate these gains in spite of domestic inflation printing above expectations in January.

Turning to next week, CAD investors may look to a speech by Bank of Canada (BoC) Governor Tiff Macklem for fresh impetus next week, with a hawkish outlook from Macklem likely to buoy the ‘Loonie’. 

Top CAD data releases:

Feb 23 CAD BoC Macklem Speech