Brexit drama rocks the Pound, EUR/USD Hits Two-Year High in upbeat trade

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 Soars to Two-Year High

The Euro enjoyed strong support over the past week, with the EUR/USD exchange rate jumping to a two-year high as market sentiment was bolstered by coronavirus vaccine optimism. This allowed the single currency to maintain an upward trajectory in spite of some gloomy economic data.

Turning to next week’s session, the focus for EUR investors will no doubt be on the European Central Bank’s latest policy meeting, in which the bank is widely expected to announce an expansion to its monetary stimulus programme.

Top EUR data releases:

Dec 07 EUR German Industrial Production (Oct)

Dec 08 EUR Economic Sentiment (Dec)

Dec 10 EUR ECB Rate Decision

 

USD – US Dollar Undermined by Stimulus and Vaccine Optimism

The US Dollar was on the defensive for much of this week as demand for the safe-haven currency was undermined by optimism surrounding the UK’s approval of the Pfizer coronavirus vaccine and a US stimulus package. Further dampening the appeal of the US Dollar was some worrying US employment data.

Coming up next week, the publication of the latest US CPI figures will be closely watched by USD investors, with the US Dollar potentially facing additional pressure if inflation weakened in November.

Top USD data releases:

Dec 10 USD Initial Jobless Claims (05/Dec)

Dec 10 USD Inflation Rate (Nov)

Dec 11 USD Consumer Sentiment (Dec)

 

GBP – Pound Rocked by Brexit Drama

The Pound has been infused with considerable volatility this week in response to ongoing Brexit uncertainty. This saw GBP exchange rates surge through the first part of the week on reports that UK-EU trade talks had entered the ‘tunnel’ phase, before quickly crashing back to earth after this proved to be untrue.

Looking ahead, it’s clear that Brexit developments will continue to act as the main catalyst of movement in the Pound going forward, with Sterling poised to plummet should talks break down.

Top GBP data releases:

Dec 10 GBP GDP (Oct)

Dec 10 GBP Trade Balance (Oct)

Dec 10 GBP Industrial Production (Oct)

 

AUD – Australian Dollar Firms on Upbeat GDP Figures

The Australian Dollar started poorly this week, initially retreating in response to flaring tensions between Australia and its largest trading partner, China. However, the ‘Aussie’ was able to mount a convincing comeback through the latter half of the week, rallying on the back of some stronger-than-expected GDP figures and improving market sentiment.

Looking ahead, the focus for AUD investors next week will be on Australia’s latest confidence data, with an improvement in business and consumer sentiment potentially giving another leg up to the ‘Aussie’.

Top AUD data releases:

Dec 08 AUD Business Confidence (Nov)

Dec 08 AUD Consumer Confidence (Dec)

Dec 10 AUD RBA Bulletin

 

ZAR – Rand Retreats on Wage Dispute Concerns

The South African Rand fell back this week, with an initial dip coming amidst some profit taking in end-of-month flows. The Rand then extended these losses through mid-week as South Africa’s Labour Appeal Court reserved judgement on a public sector wage dispute, which could have major economic consequences for the country.

The focus for ZAR investors next week will undoubtedly be on South Africa’s latest GDP release. Will a strong rebound in growth in the third quarter be enough to relieve some concerns over the country’s considerable debt pile?

Top ZAR data releases:

Dec 08 ZA GDP (Q3)

Dec 09 Inflation Rate (Nov)

Dec 09 Retail Sales (Oct)

 

CAD – Canadian Dollar Buoyed by Rebound in GDP 

The Canadian Dollar has seen some modest gains over the past week, with the currency being supported by a welcomed rebound in GDP in the third quarter as well as robust oil prices, as WTI crude held at around $45 a barrel.

In the spotlight next week will be the Bank of Canada’s latest rate decision. No changes to monetary policy are expected this month but the ‘Loonie’ could be influenced by the bank’s outlook for 2021.

Top CAD data releases:

Dec 07 CAD Ivey PMI (Nov)

Dec 09 CAD BoC Rate Decision