Coronavirus Vaccine and US Uncertainty Dominate Currency 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 – Euro Slumps as Europe’s Coronavirus Situation Deteriorates 

The Euro fell back against most of its currency peers over the past week as surging coronavirus cases throughout Europe and the threat of new lockdown measures in Italy weighed on the single currency. This gloomy mood was reflected in the latest ZEW surveys which revealed economic sentiment in the Eurozone plunged to a six-month low this month.

Turning to next week’s session, the Euro could remain under pressure should coronavirus cases continue to surge and the Eurozone’s latest CPI figures confirm the bloc remained in a state of deflation last month.

Top EUR data releases:

Nov 18 EUR Inflation Rate (Oct)

Nov 20 EUR Consumer Confidence (Nov)

 

USD – US Dollar Buoyed by Trump’s Refusal to Concede

The US Dollar initially fell back this week as traders were cheered by the news that Joe Biden had claimed victory in the US presidential election as well the announcement of a potential coronavirus vaccine. The second half of the week was then dominated by US political concerns as Trump’s staunch refusal to concede the election unnerved markets and bolstered the safe-haven US Dollar.

Looking ahead, US political developments will remain a key concern for USD investors, amid the threat of a messy transition period, while the release of the latest US retail sales figures is also likely to influence the US Dollar.

Top USD data releases:

Nov 17 USD Retail Sales (Oct)

Nov 17 USD Industrial Production (Oct)

Nov 19 USD Initial Jobless Claims (14/Nov)

 

GBP – Pound Buoyed by Coronavirus Vaccine Optimism

The Pound struck higher this week, its gains being mostly driven by positive news of a possible coronavirus vaccine on hopes that as the major economy worst hit by the coronavirus, it will also benefit most from a vaccine. However, it wasn’t all plain sailing for Sterling as a weaker-than-expected rebound in third quarter GDP tempered the upside in GBP.

Coming up, next week the spotlight will be back on Brexit amidst hopes the UK and EU can finally reach a trade agreement before the next EU summit, with the Pound poised to surge if a deal can be found.

Top GBP data releases:

Nov 18 GBP Inflation Rate (Oct)

Nov 18 GBP EU Summit on Brexit

Nov 20 GBP Retail Sales (Oct)

 

AUD – Australian Dollar Fluctuates in Mixed Trade 

The Australian Dollar initially started well this week, bolstered by the ‘Biden bounce’ in equity markets and hopes for a coronavirus vaccine. However, the ‘Aussie’ then faced some headwinds through the latter half of the week in response to lacklustre Chinese inflation figures and renewed US political uncertainty.

Looking ahead, the focus for AUD investors next week will likely be on Australia’s latest jobs report, where another bump in the unemployment rate could put more pressure on the Australian Dollar.

Top AUD data releases:

Nov 17 AUD RBA Minutes

Nov 19 AUD Unemployment Rate (Oct)

Nov 20 AUD Retail Sales (Oct)

 

ZAR – Rand Retreats from Eight-Month High on Cooling Risk Appetite

The South African Rand opened this week on strong footing, briefly striking an eight-month high amid market jubilation over a possible coronavirus vaccine. However, the Rand was unable to sustain these gains, retreating through the remainder of the session amid easing risk appetite and a sharp rise in domestic unemployment in the third quarter.

Turning to next week, the spotlight will be on the South African Reserve Bank’s (SARB) latest rate decision. No policy changes are expected but will a dovish outlook weigh on the Rand?

Top ZAR data releases:

Nov 18 ZAR Retail Sales (Sep)

Nov 19 ZAR SARB Rate Decision

 

CAD – Canadian Dollar Retreats despite Surging Oil Prices

The Canadian Dollar ended up trending lower against the majority of its peers this week, with a sustained rally in oil prices seemingly only providing limited support to the commodity-linked ‘Loonie’.

Coming up, next week the Canadian Dollar may continue to struggle if the latest Canadian inflation and retail sales releases hint that domestic economic activity is slowing.

Top CAD data releases:

Nov 18 CAD Inflation Rate (Oct)

Nov 20 CAD Retail Sales (Sep)