More Coronavirus Vaccine News and Brexit Uncertainty Stoke Volatility
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 Strengthens Despite Negative Data
The Euro struck higher over the past week, with the single currency’s negative correlation with the US Dollar allowing it to climb as the latter retreated. The Euro’s gains even came in the face of lacklustre data, with a larger-than-expected slump in the latest Eurozone PMI releases and a souring of German business morale fuelling fears of a Q4 contraction.
Turning to next week’s session, the focus for EUR investors looks to be on the Eurozone’s consumer price index, with the Euro likely to face some pressure if the bloc remained in a state of deflation in November.
Top EUR data releases:
Dec 01 EUR Inflation Rate (Nov)
Dec 03 EUR Retail Sales (Oct)
Dec 04 EUR German Factory Orders (Oct)
USD – US Dollar Sinks amid Market Optimism
The US Dollar spent most of this week on the back foot, as demand for the safe-haven currency was undermined by coronavirus vaccine optimism as well as the news that Donald Trump had finally allowed the transition to the Biden presidency to formally begin. However this market optimism eventually began to fade, leaving room for the ‘Greenback’ to recoup some ground in the latter half of the week.
Looking ahead, the publication of the latest US payrolls will be the main focus for USD investors next week, potentially dragging on the US Dollar if the pace of job creation slowed in November as expected.
Top USD data releases:
Dec 01 USD ISM Manufacturing PMI (Nov)
Dec 03 USD ISM Non-Manufacturing PMI (Nov)
Dec 04 USD Non-farm Payrolls (Nov)
GBP – Pound Undermined by Brexit Jitters
The Pound initially got off to a stellar start this week as the news of positive results for the Oxford/AstraZeneca coronavirus vaccine, of which the UK government has pre-ordered 100 million doses, cheered GBP investors. However, the Pound struggled to stabilise at its best levels, fluctuating through the remainder of the week in response to renewed Brexit uncertainty.
Brexit will likely continue to act as the main catalyst of movement in GBP exchange rates next week, potentially infusing additional volatility into Sterling if UK-EU trade talks remain deadlocked.
Top GBP data releases:
Dec 01 GBP Manufacturing PMI (Nov)
Dec 03 GBP Services PMI (Nov)
Dec 04 GBP Construction PMI (Nov)
AUD – Australian Dollar Gains in Upbeat Trade
The Australian Dollar trended higher this week, rallying as another coronavirus vaccine announcement and another ‘Biden bounce’ helped to bolster market sentiment. However, the ‘Aussie’ faced setbacks following some underwhelming domestic data.
Turning to next week’s session the focus will be on Australia’s latest GDP figures, with AUD exchange rates poised to strengthen if growth in the third quarter beats expectations.
Top AUD data releases:
Dec 02 AUD GDP (Q3)
Dec 03 AUD Trade Balance (Oct)
Dec 04 AUD Retail Sales (Oct)
ZAR – Rand Soars to Nine-Month High
The South African Rand was catapulted to a nine-month high this week as the emerging market currency was turbocharged by the upbeat market sentiment. These gains were tempered somewhat in mid-week trade after a rise in domestic inflation was not enough to dampen expectations for more monetary easing from the South African Reserve Bank (SARB).
The Rand may extend its uptrend through next week’s session if this positive mood continues, particularly if South Africa’s latest manufacturing figures impress.
Top ZAR data releases:
Nov 30 ZAR Manufacturing PMI (Nov)
CAD – Canadian Dollar Strengthens as Oil Prices Surge
The Canadian Dollar trended higher this week, with the appeal of the commodity-linked ‘Loonie’ being boosted as oil prices soared to their best levels since the start of the coronavirus pandemic in hopes that a global rollout of a coronavirus vaccine will help to lift oil demand.
In the spotlight next week will be Canada’s latest GDP figures. Economists are forecasting a strong rebound in economic growth in the third quarter, which is likely to help bolster CAD strength.
Top CAD data releases:
Dec 01 CAD GDP (Q3)
Dec 04 CAD Trade Balance (Oct)
Dec 04 CAD Unemployment Rate (Nov)
ILS – Shekel Surges to 12-Year High
The Israeli Shekel was back on the offensive this week, with the ILS exchange rate jumping to a 12-year high against the US Dollar despite efforts by the Bank of Israel to intervene through foreign currency purchases.
Coming up next week the focus will be on the Bank of Israel’s latest rate decision, but with no rate cut expected from the bank this month, will there be anything to slow the Shekel’s ascent?
Top ILS data releases:
Nov 30 ILS BoI Rate Decision