Euro Bolstered by Strong Inflation, Pound Plummets on Dovish BoE Bailey Comments

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 Strengthens on Hotter-than-Expected Inflation

The Euro rallied through the first half of this week’s session, as stronger-than-expected French, Spanish and German inflation figures bolstered European Central Bank (ECB) rate hike bets. While this led Eurozone inflation to print above forecast, the Euro then stumbled in the second half of the week due to its negative correlation with the US Dollar.

Germany’s latest industrial data is likely to act as a key catalyst of movement for the Euro next week. Will a slump in factory orders at the start of the year pull the single currency lower?

Top EUR data releases:

Mar 6 EUR Retail Sales (Jan)

Mar 7 EUR German Factory Orders (Jan)

Mar 8 EUR German Industrial Production (Jan)

 

USD – US Dollar Stumbles in Bullish Trade

The US Dollar retreated through the first half of this week. A bullish market mood and underwhelming US economic releases both undermining USD demand. However the ‘Greenback’ was then able to recoup a portion of these losses through the latter half of the week, thanks to an uptick in US Treasury yields and hawkish Federal Reserve interest rate expectations.

Fed Chair Jerome Powell’s testimony in front of Congress and the latest US payroll figures could lead to some significant movement in the US Dollar next week. Anything which is supportive of Fed rate hike bets could propel USD exchange rates higher.

Top USD data releases:

Mar 7 USD Fed Powell Testimony

Mar 8 USD JOLTs Job Openings (Jan)

Mar 10 USD Non Farm Payrolls (Feb)

 

GBP – Pound Nosedives on Dovish Bailey Signals

The Pound got off to a roaring start this week as GBP investors welcomed the announcement of a new UK-EU deal to resolve the dispute over the Northern Ireland protocol. However, Sterling came crashing back to earth later in the session after Bank of England (BoE) Governor Andrew Bailey appeared to suggest UK interest rates may have already peaked.

Next week will see the publication of the UK’s latest GDP figures. Will a rebound in growth at the start of 2023 offer support to the Pound?

Top GBP data releases:

Mar 10 GBP GDP (Jan)

Mar 10 GBP Industrial Production (Jan)

 

AUD – Australian Dollar Fluctuates in Mixed Trade

A cautious market mood led the Australian Dollar to trade sideways at the start of this week. Strong Chinese PMI data then propelled the ‘Aussie’ sharply higher in mid-week trade, despite an underwhelming domestic GDP release. Before a souring mood led to AUD exchange rates faltering again in the second half of the session.

The Reserve Bank of Australia’s (RBA) latest interest rate decision will be centre stage for AUD investors next week. Could another hawkish rate hike help to prop up demand for the ‘Aussie’?

Top AUD data releases:

Mar 7 AUD Balance of Trade (Jan)

Mat 7 AUD RBA Interest Rate Decision

 

ZAR – Rand Finds Relief on Upbeat Data

The South African Rand trended broadly higher over the past week. The much-needed rebound in ZAR exchange rates was initially driven by a surprise fall in domestic unemployment, before China’s stronger-than-expected manufacturing data gave the Rand another shot in the arm.

South Africa’s latest GDP figures could see the Rand come under renewed pressure next week sd economists forecast a contraction of domestic growth in the fourth quarter of 2022.

Top ZAR data releases:

Mar 7 ZAR GDP (Q4)

Mar 9 ZAR Business Confidence (Q1)

 

CAD – Canadian Dollar Knocked by GDP miss

The Canadian Dollar wavered over the past week. While the commodity-linked currency was buoyed by a sustained uptick in oil prices, it faced a setback in the first half of the week after Canada’s latest GDP figures reported domestic growth stagnated in the fourth quarter.

The publication of Canada’s latest jobs report will likely be the primary focus for CAD investors next week. An expected uptick in unemployment in February is likely to drag on the ‘Loonie’ at the end of the week.

Top CAD data releases:

Mar 6 CAD Ivey PMI (Feb)

Mar 10 CAD Unemployment Rate (Feb)