Brexit Drama Prompts Pound Volatility, EUR/USD Steadies Following ECB Stimulus Announcement

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 Steady as ECB Expands Stimulus

After racing higher over the past few weeks, the Euro found itself running out of steam this week as it was undermined by Brexit uncertainty. However, the single currency was able to avoid closing the week lower after the European Central Bank (ECB) didn’t drop any dovish surprises and expanded its stimulus programme in line with expectations.

Turning to next week’s session, the focus for EUR investors will likely be on the Eurozone’s latest PMI releases, with the Euro potentially retreating if economic activity continued to contract in December.

Top EUR data releases:

Dec 15 EUR Manufacturing PMI (Dec)

Dec 15 EUR Services PMI (Dec)

Dec 17 EUR Inflation Rate (Nov)

 

USD – US Dollar Undermined by Stimulus Optimism

The US Dollar remained on the back foot this week as hopes for a US stimulus package helped to bolster market sentiment, dampening the appeal of the safe-haven currency. Adding to the US Dollar’s woes were the latest jobless claims, as a sharp jump in new claims last week stoked concerns over the US jobs markets.

Coming up next week, the spotlight for USD investors will no doubt be on the Federal Reserve’s latest rate decision. No policy changes are expected from the Fed this week but how might the bank’s 2021 forecasts impact the US Dollar?

Top USD data releases:

Dec 16 USD Retail Sales (Nov)

Dec 16 USD Fed Rate Decision

Dec 11 USD Consumer Sentiment (Dec)

 

GBP – Pound Fluctuates amid Brexit Uncertainty

The Pound continued to be rocked by Brexit developments this week, which infused further volatility into GBP exchange rates. This ultimately resulted in Sterling tumbling after a crunch meeting between Boris Johnson and European Commission President Ursula von der Leyen failed to deliver a breakthrough in trade talks.

In addition to Brexit, the Pound is also likely to be influenced by the Bank of England’s (BoE) final policy meeting of the year, with GBP exchange rates poised to fall if the bank delivers a bleak outlook for 2021 as the UK attempts to navigate a post-pandemic and post-Brexit landscape.

Top GBP data releases:

Dec 15 GBP Unemployment (Oct)

Dec 16 GBP Inflation Rate (Nov)

Dec 17 GBP BoE Rate Decision

 

AUD – Australian Dollar Accelerates in Risk-On Trade

The Australian Dollar struck higher this week as the continued improvement in market sentiment reflected well on the risk-sensitive currency. This uptick was reinforced by some positive business and consumer sentiment figures, as domestic confidence was bolstered by Australia’s recent success in combating the coronavirus.

Looking ahead, the focus for AUD investors next week will more than likely be on Australia’s latest jobs report, where a rise in unemployment in November could undermine the ‘Aussie’s recent gains.

Top AUD data releases:

Dec 15 AUD RBA Minutes

Dec 15 AUD Services PMI (Dec)

Dec 17 AUD Unemployment Rate (Nov)

 

ZAR – Rand Rallies on Solid Growth Figures

The South African Rand struck higher this week, rallying mostly in response to South Africa’s latest GDP figures after economic growth rebounded faster-than-expected in the third quarter. This uptick in the emerging market currency was further supported by risk-on market trade. 

In the absence of any notable ZAR data releases next week, the Rand is looks to be main influenced by market sentiment, potentially leading to further gains if the mood remains festive and upbeat.

 

CAD – Canadian Dollar Firms as Oil Prices Jump

The Canadian Dollar rallied this week, and the commodity-linked currency was underpinned by a healthy uptick in oil prices. Meanwhile, the Bank of Canada (BoC) also concluded its latest policy meeting this week, with a cautiously optimistic outlook from the bank offering further support to CAD exchange rates.

In the spotlight next week will be Canada’s latest consumer price index, where another acceleration of inflation in November may help the ‘Loonie’ to extend its gains.

Top CAD data releases:

Dec 15 CAD BoC Macklem Speech

Dec 16 CAD Inflation Rate (Nov)

Dec 18 CAD Retail Sales (Oct)