Euro Rallies on ECB Rate Hike Speculation, US Dollar Knocked by Dismal GDP Release

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 Bolstered by ECB Rate Hike Bets

The Euro got off to a poor start this week, with the single currency weakening after Germany slashed its growth forecast for 2021. The single currency roared back to life in the latter half of the week however, as the European Central Bank’s (ECB) admission that inflation will remain higher for longer than previously expected, trigger some rate hike speculation, in spite of the bank’s broadly dovish tone.

The publication of Germany’s latest industrial data will no doubt be the focus for EUR investors nest week, with a rebound in factory orders and industrial production potentially lending some support to the Euro.

Top EUR data releases:

Nov 4 EUR German Factory Orders (Sep)

Nov 5 EUR German Industrial Production (Sep)

Nov 5 EUR Retail Sales (Sep)

 

USD – US Dollar Slips as GDP Disappoints

The US Dollar initially ticked higher this week, with the appeal of the ‘Greenback’ being bolstered by a cautious market mood and rising US Treasury yields. However, the US Dollar then faltered in the latter half of the session, after the latest US GDP figures reported a weaker-than-expected expansion of domestic growth in the third quarter.

Looking ahead, it’s set to be a busy session for USD investors next week, with the latest Federal Reserve policy meeting and US payroll print both set to influence the US Dollar.

Top USD data releases:

Nov 3 USD ISM Non-Manufacturing PMI (Oct)

Nov 3 USD Fed Interest Rate Decision

Nov 5 USD Non-Farm Payrolls (Oct)

 

GBP – Pound Fluctuates Following UK Autumn Budget

The Pound traded in a wide range over the past week, with the currency initially finding some strong support through the first half of the session on the back of upbeat retail data. However Sterling was unable to sustain these gains for long, with GBP exchange rates slipping in the latter half of the week amidst Brexit jitters and a lukewarm response to Chancellor Rishi Sunak’s Autumn Budget.

Centre stage next week will be the Bank of England’s (BoE) latest interest rate decision. While a November rate hike may no longer be on the cards, could some hawkish forward guidance help the Pound to shoot higher?

Top GBP data releases:

Nov 1 GBP Manufacturing PMI (Oct)

Nov 3 GBP Services PMI (Oct)

Nov 4 GBP BoE Interest Rate Decision

 

AUD – Australian Dollar Bolstered by Strong Inflation Reading

The Australian Dollar trended broadly higher this week following the release of a stronger-than-expected core inflation reading. The trimmed mean CPI print reported underlying inflation climbed above 2% for the first time since 2015, sparking speculation the Reserve Bank of Australia (RBA) might begin tightening its monetary policy a little quicker than previous thought.

Following the recent inflation figures, AUD investors will be keeping a close eye on the RBA’s forward guidance as the bank concludes its latest policy meeting next week. Expect to see the ‘Aussie’ stumble if policymakers are less hawkish than investors had hoped

Top AUD data releases:

Nov 2 AUD RBA Interest Rate Decision

Nov 4 AUD Trade Balance (Sep)

 

ZAR – Rand Dented by Falling Commodity Prices

The South African Rand ticked lower this week, as a drop in commodity prices dampened the appeal of the emerging market currency. This downturn in ZAR exchange rates was also reinforced by a cautious market mood in the second half of the week.

Looking ahead, in the absence of any major ZAR data releases next week, the direction of the Rand may be driven primarily by market sentiment, potentially leading to pressure on the emerging market currency if investors remain wary.

 

CAD – Canadian Dollar Jumps as BoC Ends Bond Purchases

The Canadian Dollar appreciated sharply this week in the wake of the Bank of Canada’s (BoC) latest policy meeting, after the bank surprised markets by calling an immediate halt to its weekly asset purchases. However a modest pullback in oil prices somewhat tempered these gains in the latter half of the week.

The publication of Canada’s latest employment report will likely be in the spotlight for CAD investors next week. Will another drop in domestic unemployment help to buoy the Canadian Dollar?

Top CAD data releases:

Nov 4 CAD Trade Balance (Sep)

Nov 5 CAD Unemployment Rate (Oct)