Euro Stumbles as Russia Closes Key Gas Pipeline, Pound Wavers on Energy Price Freeze

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 Rocked by Shut Down of Nord Stream 1 Pipeline

The Euro stumbled out of the gates this week as EUR investors were spooked by the news that Gazprom had shutdown the Nord Stream 1 gas pipeline ‘indefinitely’. A rebound in the Euro was then cut short by the European Central Bank (ECB). While the Bank delivered a record 75bps rate hike, it also slashed its Eurozone growth forecast for 2023.

The Euro could face headwinds next week, if Germany’s ZEW economic sentiment index reports investor morale in the Eurozone’s largest economy remains continued to deteriorate this month.

Top EUR data releases:

Sep 13 EUR German ZEW Economic Sentiment (Sep)

Sep 14 EUR Industrial Production (Jul)

Sep 16 EUR Inflation Rate (Sep)

 

USD – US Dollar Bolstered in Cautious Trade

The US Dollar struck a new 20-year high this week, as demand for the safe-haven currency was bolstered by a prevailing risk-off mood. Reinforcing these gains was a stronger-than-expected ISM non-manufacturing PMI and Federal Reserve rate hike bets.

The publication of the US consumer price index will be a key focus for USD investors next week, with another slowdown in inflation potentially denting the US Dollar if it impacts Fed rate hike expectations.

Top USD data releases:

Sep 13 USD Inflation Rate (Aug)

Sep 15 USD Retail Sales (Aug)

Sep 16 USD Consumer Sentiment (Sep)

 

GBP – Pound Finds Fleeting Gains on Energy Price Freeze Hopes

The Pound struck higher in the first half of this week, with Sterling being underpinned by reports that Liz Truss’s new government would be imposing an energy price freeze. However concerns over a massive increase in government borrowing to fund the freeze, in addition to some dovish comments from Bank of England (BoE) policymakers saw the Pound struggle through the second half of the session.

GBP investors face a busy session next week with a raft of high-impact UK economic data and the BoE’s latest interest rate decision. Will another ‘dovish’ hike from the BoE leave the Pound on the back foot?

Top GBP data releases:

Sep 13 Unemployment Rate (Jul)

Sep 14 Inflation Rate (Aug)

Sep 15 BoE Interest Rate Decision

 

AUD – Australian Dollar Slumps Following Dovish RBA Hike

The Australian Dollar trended broadly lower over the past week, with the currency’s initial losses coming as the Reserve Bank of Australia’s (RBA) 50bps interest rate hike also included hints that future increases may be more modest in scope. These losses were then extended by a weaker-than-expected GDP release and Chinese trade data.

In the spotlight for AUD investors next week will be Australia’s latest unemployment figures. Will another drop in the jobless rate last month help to buoy the Australian Dollar?

Top AUD data releases:

Sep 13 AUD Consumer Confidence (Sep)

Sep 13 AUD Business Confidence (Aug)

Sep 15 AUD Unemployment Rate (Aug)

 

 

ZAR – Rand Undermined by Weak Data

The South African Rand initially strengthened this week, before quickly relinquishing its gains after South Africa’s latest GDP figures reported a contraction in domestic growth in the second quarter. The Rand then may another attempt to rally in the latter half of the week, which also prove short lived after South Africa posted a surprise current account deficit in Q2.

The publication of South Africa’s latest retail sales figures could act as a headwind for the Rand next week, if July’s figures report another contraction in sales growth.

Top ZAR data releases:

Sep 14 ZAR Retail Sales (Jul)

 

CAD – Canadian Dollar Fluctuates amid Oil Price Volatility

The Canadian Dollar traded in a wide range this week as fluctuating oil prices infused volatility into the commodity-linked currency. The ‘Loonie’ remained primarily driven by oil price movements even in spite of the Bank of Canada’s (BoC) latest interest rate decision amid the bank’s vague forward guidance.

In the absence of any notable CAD data releases next week, its likely movement in the Canadian Dollar will be tied to oil price dynamics.