Euro Rebounds as EU to Intervene in Energy Markets, Pound Slumps amid Increasingly Bleak UK Economic Outlook.

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 Hopes for EU’s Energy Intervention

The Euro found its footing again this week, as EUR investors were cheered by the announcement that the EU is preparing to make an ‘emergency intervention’ in the energy markets. Aiding the single currency’s recovery was a record rise in Eurozone inflation, which helped to fuel European Central Bank (ECB) rate hike speculation.

All eyes will be on the ECB next week. Will the bank play it safe with a 50bps hike? Or will the ECB keep the foot on the accelerator and deliver a 75bps hike? Expect the Euro to surge if policymakers opt for the latter.

Top EUR data releases:

Sep 6 EUR German Factory Orders (Jul)

Sep 8 EUR ECB Interest Rate Decision

Sep 9 EUR EU Emergency Energy Meeting

 

USD – US Dollar Bolstered by Fed Rate Hike Bets

The US Dollar enjoyed robust support through most of this week, with demand for the currency being underpinned by aggressive Federal Reserve rate hike bets. However, USD exchange rates then gave ground at the end of the week, with the currency falling victim to some profit taking in spite of a stronger-than-expected payroll release.

Turning to next week, the US Dollar could face some headwinds if the latest ISM non-manufacturing PMI reports another slowing of US service sector growth last month.

Top USD data releases:

Sep 6 USD ISM Non-Manufacturing PMI (Aug)

Sep 8 USD Initial Jobless Claims (3/Sep)

 

GBP – Pound Undermined by Gloomy Economic Outlook

The Pound trended broadly lower this week, the currency being undermined by growing concern over the UK’s economic outlook. This came amid a forecast from Goldman Sachs that suggested UK inflation could reach 22% and echoed the Bank of England’s (BoE) warning that the UK could slip into a recession later this year.

Looking ahead, the appointment of the UK’s new Prime Minister will be in the spotlight next week, with GBP investors particularly focused on what steps the new PM will be taking to tackle the UK’s cost of living crisis.

Top GBP data releases:

Sep 5 GBP Services PMI (Aug)

 

AUD – Australian Dollar Fluctuates amid Mixed Chinese Data

The Australian Dollar traded in a wide range over the past week, the currency initially found some support on the back of an upbeat services PMI from China. However some disappointing domestic and Chinese manufacturing data, coupled with some risk-off flows lead AUD exchange rates to weaken in the second half of the week.

The Reserve Bank of Australia (RBA) is expected to deliver another 50bps rate hike next week. With the move largely priced in, any subsequent movement may be tied to the RBA’s forward guidance. Will another dovish outlook from the bank lead the ‘Aussie’ to give some ground?

Top AUD data releases:

Sep 5 AUD Retail Sales (Jul)

Sep 6 AUD RBA Interest Rate Decision

Sep 7 AUD GDP (Q2)

 

ZAR – Rand Dented by Cautious Market Mood

The South African Rand trended lower this week, the emerging market currency struggling to hold its ground amid some notable risk-off flows. The downturn in the Rand was also attributed to a sustained drop in key South African exports such as gold.

Centre stage for ZAR investors next week will be South Africa’s latest GDP figures. This could see the Rand face fresh pressure as they are forecast to report a sizable contraction of growth in the second quarter.

Top ZAR data releases:

Sep 6 ZAR Consumer Confidence (Q3)

Sep 6 ZAR GDP (Q2)

Sep 8 ZAR Business Confidence (Q3)

 

CAD – Canadian Dollar Undermined by Oil Price Slump

The Canadian Dollar fell back this week, the commodity-linked currency being undermined as oil prices began to retreat again. This downturn in CAD exchange rates was also reinforced by Canada’s latest GDP release after July’s preliminary figures reported a surprise contraction in growth.

The Bank of Canada (BoC) will deliver its latest interest rate decision next week. The BoC is widely expected to leave its monetary policy untouched this month, but could a surprise hike help to bolster the ‘Loonie’?

Top CAD data releases:

Sep 7 CAD Balance of Trade (Jul)

Sep 7 CAD BoC Interest Rate Decision

Sep 9 CAD Unemployment Rate (Aug)