Dovish Fed Expectations Dent the US Dollar, Pound Rocked by Renewed Brexit Tensions
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 Undermined by Cautious ECB
The Euro got off to a robust start this week, with the upgrading of the Eurozone’s first quarter GDP figures helping to make up for some lacklustre German data releases. But the Euro then faltered in the wake of the European Central Bank’s (ECB) latest policy meeting after President Christine Lagarde suggested that it is too early to begin discussing the tapering of its bond purchases.
Turning to next week’s session, the primary focus for EUR investors will be on the Eurozone’s consumer price index, with the Euro likely to rise if May’s finalised figures see inflation revised higher.
Top EUR data releases:
Jun 14 EUR Industrial Production (Apr)
Jun 16 EUR Wage Growth (Q1)
Jun 17 EUR Inflation Rate (May)
USD – US Dollar Slumps Following Dramatic Surge in US Inflation
The US Dollar traded in a wide range through the first half of this week, with fluctuating US Treasury yields and some hawkish comments from Treasury Secretary Janet Yellen infusing some volatility into the ‘Greenback’. USD exchange rates then fell sharply in the second half of the week after a whopping 5% jump in US inflation was not enough to convince investors that the Federal Reserve might soon start to tighten its monetary policy.
Centre stage next week will undoubtedly be the Fed’s June policy meeting, with the US Dollar poised to slump if the bank confirms it still some way from tapering its quantitative easing programme.
Top USD data releases:
Jun 15 USD Retail Sales (May)
Jun 16 USD Fed Rate Decision
Jun 17 USD Initial Jobless Claims (12/Jun)
GBP – Pound Knocked by Brexit Concerns
The Pound found itself on the defensive through most of this week’s session, initially facing pressure after Health Secretary Matt Hancock suggested the government is ‘open’ to delaying the next stage of lockdown easing. However, the majority of Sterling losses were tied to renewed Brexit uncertainty following the failure of the UK and EU to resolve their dispute over the Northern Ireland protocol in talks on Wednesday.
Looking ahead, it looks to be a busy session for GBP investors next week, with a number of high-impact data releases, but the real focus will be on Boris Johnson’s announcement whether or not the 21 June reopening date will be delayed.
Top GBP data releases:
Jun 15 GBP Unemployment Rate (Apr)
Jun 16 GBP Inflation Rate (May)
Jun 18 GBP Retail Sales (May)
AUD – Australian Dollar Rangebound as Domestic Sentiment Weakens
The Australian Dollar was trapped in a narrow range for much of this week’s session, with the currency’s attempts to rally in response to an improving market mood being undermined by a surprise drop in Australia’s latest business and consumer sentiment indexes.
Turning to next week’s session, the focus for AUD investors will be on Australia’s latest jobs report. Will another fall in unemployment last month provide a boost to the ‘Aussie’?
Top AUD data releases:
Jun 15 AUD RBA Minutes
Jun 17 AUD Unemployment Rate (May)
ZAR – Rand Slumps Despite Upbeat GDP Figures
The South African Rand steadily drifted lower this week, with the emerging market currency falling victim to bearish trading conditions, which saw investors largely overlook a stronger-than-expected rise in domestic GDP in the first quarter of 2021.
Coming up next week, will data showing another contraction in South African retail sales growth in May put additional pressure on the Rand?
Top ZAR data releases:
Jun 17 Retail Sales (May)
CAD –Canadian Dollar Fluctuates amid Oil Price Volatility
The commodity-linked Canadian Dollar was rocked by fluctuating oil prices this week, as WTI crude prices soared to a near three-year high before collapsing again. Also influencing CAD exchange rates was the Bank of Canada (BoC) which struck an optimistic tone following its latest policy meeting.
The publication of Canada’s CPI figures will no doubt be the focus for CAD investors next week, with a further acceleration of domestic inflation potentially lifting the ‘Loonie’.
Top CAD data releases:
Jun 16 CAD Inflation Rate (May)
Jun 17 CAD ADP Employment Change (May)