US Dollar Rallies on Fed Minutes, Pound Gains Dented by Coronavirus Concerns

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 Undermined by USD Strength

The Euro struck higher in the first half of this week’s session, with optimism over the EU’s vaccine rollout and broad weakness in the US Dollar allowing the single currency to appreciate. However, a USD resurgence and a weaker-than-expected core CPI print resulted in the Euro retreating from its best levels.

Turning to next week’s session, the release of Germany’s latest GDP figures could provide a boost to the Euro if the finalised figures see the contraction of growth in the first quarter revised slightly lower.

Top EUR data releases:

May 25 EUR German GDP (Q1)

May 25 EUR German Ifo Business Climate (May)

May 28 EUR Consumer Confidence (May)

 

USD – US Dollar Rebounds Following FOMC Minutes

The US Dollar opened this week on the defensive, with a prevailing risk-on mood and expectations that the Federal Reserve will maintain its ultra-accommodative monetary policy dragging on the currency. However, the ‘Greenback’s fortunes improved dramatically in the latter half of the week after the minutes from the Fed’s latest policy meeting revealed some policymakers are open to discussing the tapering of the bank’s bond purchases in the future.

The latest US durable goods figures will likely act as a key catalyst of movement in the US Dollar next week. Will a larger expansion of new orders in April help to boost USD exchange rates?

Top USD data releases:

May 27 USD GDP (Q1)

May 27 USD Durable Goods Orders (Apr)

May 28 USD PCE Price Index (Apr)

 

GBP – Pound’s Gains Reversed by Coronavirus Concerns

The Pound start strongly this week due to optimism over the reopening of more of the UK economy and a surprise fall in domestic unemployment in March lifting Sterling sentiment. However, this upside in GBP exchange rates began to fade in mid-week trade, with a stronger-than-expected inflation reading being offset by growing concern over the spread of the Indian variant of the coronavirus in the UK.

Looking ahead, with next week expected to be crucial in determining whether or not the government goes ahead with the next stage of restriction easing on 21 June, the Pound is likely to be particularly vulnerable to any negative coronavirus headlines. 

Top GBP data releases:

May 25 GBP CBI Distributive Trades (May)

 

AUD – Australian Dollar Fluctuates on RBA Minutes

The Australian Dollar traded in a wide range this week, with the currency fluctuating in the first half of the week as underwhelming Chinese data was offset by the minutes from the Reserve Bank of Australia’s (RBA) latest policy meeting. This volatility then persisted into the latter half of the session as a risk-off mood initially dented AUD exchange rates before being lifted again by a surprise drop in unemployment.

With AUD data thin on the ground next week, it’s likely the ‘Aussie’ will remain sensitive to market sentiment, potentially softening if coronavirus concerns in Asia continue to mount.

 

ZAR – Rand Firms Following SARB Rate Decision

The South African Rand was infused with volatility in the first half of the week amidst fluctuating market risk appetite and soaring inflation. The Rand then firmed in the second half of the week in the wake of the South African Reserve Bank’s (SARB) latest rate decision as it struck an upbeat tone.

Coming up next week, the only ZAR data release of note will be South Africa’s latest producer price index, in which another jump in price growth last month could prove supportive of the Rand. 

Top ZAR data releases:

May 27 ZAR PPI (Apr)

 

CAD – Canadian Dollar Undermined by Falling Oil Prices

The Canadian Dollar faced a setback this week, as the commodity-linked currency was knocked by falling oil prices, with the slump in WTI crude even overshadowing a sharper-than-expected acceleration in domestic inflation last month.

Turning to next week’s session, in the absence of any notable data releases, CAD exchange rates may continue to be driven by oil prices, potentially leading to more weakness if concerns over limited demand continue to weigh on the commodity.