US Dollar Sinks on Dovish Fed Comments, UK Reopening Briefly Supports the Pound

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 Lifted by USD Weakness

The Euro rallied this week, with the single currency’s negative correlation with the US Dollar spurring it higher as the latter fell. This upside in the Euro was further supported by the latest Eurozone retail sales figures, which printed well above expectations as sales growth rocketed up from –5.2% to 3% in February.

In the spotlight next week will be the European Central Bank’s (ECB) latest rate decision. No policy changes are expected this month, but will concern over the Eurozone’s economic recovery in light of Europe’s coronavirus woes dampen the appeal of the Euro?

Top EUR data releases:

Apr 22 EUR ECB Rate Decision

Apr 23 EUR Manufacturing PMI (Apr)

Apr 23 EUR Services PMI (Apr)

 

USD – US Dollar Dented by a Dovish Fed

The US Dollar was on the back foot this week, being undermined by dovish comments from Federal Reserve Chair Jerome Powell, who dismissed concerns over rising inflation and suggested the next rate hike is unlikely to take place until at least the end of 2022. However, the ‘Greenback’ clawed back some losses towards the end of the week on the back of a strong retail sales report and surprisingly large drop in new jobless claims.

Looking ahead, the absence of any major US data releases next week could see any movement in the US Dollar driven more by market sentiment, potentially extending the currency’s losses if the mood continues to improve.

Top USD data releases:

Apr 22 USD Initial Jobless Claims (17/Apr) 

Apr 22 USD Existing Home Sales (Mar)

Apr 23 USD Services PMI (Apr)

 

GBP – Pound Finds Short-Lived Gains as UK Reopens

The Pound started strongly this week as GBP investors were upbeat about the reopening of a large portion of the UK economy. However, these gains quickly faded amidst concerns over potential disruption to the UK’s vaccine rollout and rising uncertainty over the upcoming Scottish Parliamentary election.

Turning to next week, it looks to be a busy session for GBP investors who face a slew of high impact UK data. Will some positive releases offer more robust support to the Pound next week?

Top GBP data releases:

Apr 20 GBP Unemployment Rate (Feb)

Apr 21 GBP Inflation Rate (Mar)

Apr 23 GBP Services PMI (Apr)

 

AUD – Australian Dollar Surges as Risk Appetite Improves

The Australian Dollar struck higher this week, being bolstered by broad USD weakness as well as the news that coronavirus restrictions in Queensland would be lifted earlier than expected. These gains were supported by some positive data releases, most notably March’s jobs figures, which reported a larger-than-expected fall in unemployment.

In focus next week will be Australia’s latest retail sales figures, with the ‘Aussie’ potentially extending its recent gains if sales growth rebounded in March.

Top AUD data releases:

Apr 20 AUD RBA Minutes

Apr 21 AUD Retail Sales (Mar)

Apr 23 AUD Services PMI (Apr)

  

ZAR – Rand Rallies in Upbeat Trade

The South African Rand struck higher this week, with the emerging market currency benefiting from bullish market mood and drop in the US Dollar. Aiding the Rand’s rally was the publication of South Africa’s latest retail sales figures, which reported a surprise expansion in February. 

The publication of South Africa’s consumer price index will be the main focus for ZAR investors next week. Will a rise in inflation last month bolster the appeal of the Rand?

Top ZAR data releases:

Apr 21 ZAR Inflation Rate (Mar)

 

CAD – Canadian Dollar Stumbles as Coronavirus Cases Rise

The Canadian Dollar edged lower this week, giving ground against the majority of its peers as Canada faces a third wave of coronavirus cases. This offset some robust movement in the oil market, which may have otherwise supported the commodity-sensitive ‘Loonie’.

Looking ahead, the main catalyst of movement in the Canadian Dollar next week will be the Bank of Canada’s (BoC) rate decision. While the bank is not expected to alter its monetary policy, will concerns over Canada’s coronavirus resurgence lead to a more dovish outlook?

Top CAD data releases:

Apr 21 CAD Inflation Rate (Mar)

Apr 21 CAD BoC Rate Decision