Euro Plunges amid Recession Fears, UK Political Chaos Rocks the Pound

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 Nosedives on Eurozone Recession Fears

The Euro plummeted this week, the single currency being battered by fears that the Eurozone is at considerable risk of slipping into a recession. This was triggered by European energy concerns, amid a sharp rise in wholesale gas prices and growing fears that Russia could halt exports to the continent at any time.

Turning to next week we may see Germany’s ZEW economic sentiment index place additional pressure on the Euro if investor morale in the Eurozone’s largest economy drops this month.

Top EUR data releases:

Jul 12 EUR ZEW German Economic Sentiment (Jul)

Jul 13 EUR German Inflation Rate (Jun)

Jul 13 EUR Industrial Production (May)

 

USD – US Dollar Soars amid Global Recession Fears

The US Dollar rocketed higher through the first half of this week, with the currency striking new multi-year highs against many of its peers as global recession fears saw investors flock to the safe-haven currency. The end of the week then saw the publication of the latest US non farm payrolls extend these gains following after the US economy added more jobs than expected in June.

The publication of the US consumer price index will no doubt be the primary focus for USD investors next week, with another jump in inflation likely to reinforce Federal Reserve rate hike bets and boost USD exchange rates.

Top USD data releases:

Jul 13 USD Inflation Rate (Jun)

Jul 15 USD Retail Sales (Jun)

Jul 15 USD Consumer Sentiment (Jul)

 

GBP – Pound Rocked by Political Drama

A turbulent week in UK politics infused volatility into the Pound this week. A flurry of government resignations ultimately leading Boris Johnson to resign as Prime Minister. The resignation itself actually buoyed GBP exchange rates on hopes it will remove some of the uncertainty which has weighed on Sterling in recent weeks.

In addition to domestic politics the direction of the Pound next week may also be determined by the UK’s latest GDP figures. With another contraction of growth in May likely to weigh on Sterling sentiment.

Top GBP data releases:

Jul 13 GBP GDP (May)

Jul 13 GBP Industrial Production (May)

 

AUD – Australian Dollar Fluctuates Following RBA Rate Hike

The Australian Dollar traded in a wide range this week, initially fluctuating in response to the Reserve Bank of Australia’s (RBA) latest interest rate decision as its 50bps hikes was overshadowed by its cautious forward guidance. A rise in commodity prices coupled with a larger-than-expected Australia trade surplus then helped to bolster the ‘Aussie’ in the latter half of the session.

Australia’s latest employment figures will be the main focus for AUD investors next week. Could another drop in unemployment bolster the ‘Aussie’.

Top AUD data releases:

Jul 12 AUD Business Confidence (Jun)

Jul 13 AUD Consumer Confidence (Jul)

Jul 14 AUD Unemployment Rate (Jun)

 

ZAR – Rand Extends Losses in Gloomy Trade

The South African Rand initially held its ground this week, supported by hopes of an end to the country’s power crisis amid reports that workers striking as Eskom had agreed to a new wage deal. However the emerging market currency then stumbled through the latter half of the week as a result of global recession fears.

Looking ahead, if we see South Africa report a rebound in retail sales in May we might see the Rand trade with a little more support next week.

Top ZAR data releases:

Jul 11 ZAR Manufacturing Production (May)

Jul 12 ZAR Retail Sales (May)

 

CAD – Canadian Dollar Dented by Oil Price Slump

Demand for the Canadian Dollar was suppressed this through much of this week amidst a sharp downturn in oil prices. The ‘Loonie’ then proceeded to close the week lower in spite of Canada reporting domestic unemployment fell to a record low last month.

Centre stage for CAD investors next week will be the Bank of Canada’s (BoC) latest interest rate decision. Will a 75bps hike and hawkish forward guidance underpin demand for the ‘Loonie’?

Top CAD data releases:

Jul 13 CAD BoC Interest Rate Decision