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Euro Rocked by EU-Russia Tensions, US Dollar Rallies in Risk-Off Trade

Euro Rocked by EU-Russia Tensions, US Dollar Rallies in Risk-Off Trade

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 Stumbles as EU-Russia Tensions Rise

The Euro initially opened this week on strong footing, as EUR investors were relieved that Vladimir Putin’s speech on Russia’s Victory Day didn’t signal plans to escalate the war in Ukraine. However the single currency then fell sharply as Russia warned Finland’s application to NATO could push Europe closer to Nuclear war.

Looking ahead, the Euro could face an uphill battle next week if there are any signs that Russia might escalate the war in Eastern Europe.

Top EUR data releases:

May 16 EUR Trade Balance (Mar)

May 17 EUR GDP (Q1)

May 18 EUR Inflation Rate (Apr)


USD – US Dollar Soars to New Multi-Year Highs

The US Dollar soared again this week, with the ‘Greenback’ striking new multi-year highs against the majority of its peers as demand for the safe-haven currency was underpinned by a skittish market mood. This uptick was reinforced by the release of the latest US CPI figures after US inflation beat forecasts and stoked Federal Reserve rate hike expectations.

If the risk-off mood persists the US Dollar is likely to maintain its upward momentum into next week. Any upside in USD exchange rates may also be supported by the latest US retail sales figures.

Top USD data releases:

May 17 USD Retail Sales (Apr)

May 17 USD Industrial Production (Apr)

May 19 USD Initial Jobless Claims (14/May)


GBP – Pound Softens as UK Economic Concerns Persis

The Pound trended broadly lower over the past week, with the currency continuing to be pressured by the grim forecasts published by the Bank of England (BoE) the previous week. Concerns over the trajectory of the UK economy were compounded by the UK’s latest GDP figures, which underperformed and reported the economy contracted in March.

There are a number of high-profile UK data releases next week, the most impactful of which is likely to be the latest consumer price index. Another sharp jump in inflation is likely to stoke recession fears and further undermine the Pound.

Top GBP data releases:

May 17 GBP Unemployment Rate (Mar)

May 17 GBP Average Earnings (Mar)

May 18 GBP Inflation Rate (Apr)



AUD – Australian Dollar Weakens as Domestic Confidence Falls

The Australian Dollar tumbled through the first half of this week, pressured by a fall in Australia’s latest business and consumer confidence figures. A brief uptick in risk sentiment then offered some fleeting support to the ‘Aussie’ in the middle of the week before these gains were quickly reversed as the market mood soured again.

A drop in Australian unemployment in April may strengthen the ‘Aussie’ next week, with additional support potentially coming from Australia’s wage price index, if it reports wage growth accelerated in the first quarter of 2022.

Top AUD data releases:

May 17 AUD RBA Minutes

May 18 AUD Wage Price Index (Q1)

May 19 AUD Unemployment Rate (Apr)


ZAR – Rand Flip Flops in Mixed Trade

Trade in the South African Rand was mixed over the past week as uneven risk sentiment stoked volatility in the emerging market currency. This ultimately saw the Rand extend its losing streak into its fourth week after the market mood soured again in the latter half of the week.

An expected interest rate hike from the South African Reserve Bank (SARB) could offer some support to the Rand next week, especially if its forward guidance indicates there are more hikes to come.

Top ZAR data releases:

May 18 ZAR Inflation Rate (Apr)

May 18 ZAR Retail Sales (Mar)

May 19 ZAR SARB Interest Rate Decision


CAD – Canadian Dollar Fluctuates amid Oil Price Volatility

The Canadian Dollar traded in a wide range over the past week, with the commodity-sensitive currency tracking the fluctuations in oil prices. This left the ‘Loonie’ on the defensive at the start of the week, before rebounding toward the end of the session amid a strong pick up in crude prices.

The publication of Canada’s latest CPI figures are likely to drive CAD exchange rates next week. Will another rise in inflation boost Bank of Canada (BoC) rate hike expectations and lift the Canadian Dollar?

Top CAD data releases:

May 18 CAD Inflation Rate (Apr)

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