US Stimulus and Resuming Brexit Talks Cheer Markets
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 – Rallies despite Worrying Coronavirus Statistics
The Euro shot higher this week, with the single currency benefiting from a clear USD selling bias and an improvement in market sentiment. However, the Euro’s gains were tempered through the second half of the week, in response to worrying European coronavirus figures and PMIs showing shrinking private sector activity.
In focus for EUR investors next week we have the Eurozone’s third quarter GDP figures as well as the European Central Bank’s (ECB) latest policy meeting, with the former potentially putting significant pressure on the Euro if growth falls short of forecasts.
Top EUR data releases:
Oct 29 EUR ECB Rate Decision
Oct 30 EUR GDP (Q3)
Oct 30 EUR Inflation Rate (Oct)
USD – US Dollar Tumbles on Hopes for US Stimulus
The US Dollar faced broad selling pressure this week, with the safe-haven appeal of the ‘Greenback’ being knocked through the first half of the week by hopes for a US stimulus deal before the election. However, the US Dollar clawed back a portion of these losses through the latter half of the week as stimulus hopes faded and coronavirus concerns weighed on investor sentiment.
Centre stage next week will be the publication of the latest US GDP figures. Will a dramatic rebound in economic growth in the third quarter drive the US Dollar higher?
Top USD data releases:
Oct 27 USD Durable Goods Orders (Sep)
Oct 29 USD GDP (Q3)
Oct 30 USD Personal Spending (Sep)
GBP – Pound Surges as Brexit Talks Resume
After a rocky start, the Pound was catapulted to a six-week high this week in response to renewed hopes that the UK will avoid a no-deal Brexit. This came after the EU’s Chief Negotiator Michel Barnier suggested a deal is ‘within reach’ as the UK and EU agreed to resume Brexit trade talks.
Looking ahead, Brexit is likely to remain a key concern for GBP investors as ‘intensified’ talks resume. However, we can expect UK coronavirus headlines to also act as a key driving force amidst a lull in impactful GBP data.
Top GBP data releases:
Oct 27 GBP CBI Distributive Trades (Oct)
Oct 29 GBP Mortgage Approvals (Sep)
AUD – Australian Dollar Fluctuates in Mixed Market Sentiment
The Australian Dollar has traded in a wide range this week in response to shifting market sentiment. This was driven by the fluctuating expectations for a US stimulus deal, but was also influenced by expectation for more monetary easing from the Reserve Bank of Australia (RBA).
Looking ahead, a rebound in domestic inflation in the third quarter could lend some support to the ‘Aussie’ next week, but any upside may prove limited in the face of ongoing coronavirus and US political uncertainty.
Top AUD data releases:
Oct 28 AUD Inflation Rate (Q3)
Oct 29 AUD Business Confidence (Oct)
Oct 30 AUD PPI (Q3)
ZAR – Rand Strengthens in Risk-On Trade
The South African Rand strengthened this week as improving market sentiment carried the emerging market currency higher.
Turning to next week, the spotlight will be on the publication of South Africa’s mid-term budget, with the Rand poised to fall on what are expected to be some gloomy debt forecasts.
Top ZAR data releases:
Oct 27 ZAR Unemployment Rate (Q3)
Oct 28 ZAR Inflation Rate (Sep)
Oct 28 ZAR Budget
CAD – Canadian Dollar Undermined by Weak Domestic Data
The Canadian Dollar initially sought to accelerate this week on the back of robust oil prices, but was unable to sustain its gains in response to weaker-than-expected domestic retail sales figures in August.
Coming up next week, the focus for CAD investors will be on the Bank of Canada’s (BoC) latest policy meeting. No policy changes are expected this month but could a cautious tone from the bank dampen the appeal of the ‘Loonie’?
Top CAD data releases:
Oct 28 CAD BoC Rate Decision
Oct 30 CAD GDP (Aug)
Oct 30 CAD PPI (Sep)
ILS – Shekel Surges to Record High
The Israeli Shekel made significant gains this week, with the ILS exchange rate jumping to a record high against a basket of its currency peers as Israel began to emerge out of lockdown.
Coming up next week, the focus will be on Israel’s latest jobless figures, where an expected fall in unemployment last month may extend the upside in the Shekel.
Top ILS data releases:
Oct 26 ILS Industrial Production (Aug)
Oct 29 ILS Unemployment Rate (Sep)