Pound Bolstered by BoE Rhetoric, Euro Sinks as Eurozone Data Disappoints

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 Dented by German Recession Concerns

The Euro stumbled through the first half of this week, with the single currency being undermined by a disappointing Eurozone retail sales print and German recession fears. An underwhelming German GDP release then saw the Euro extend this decline through the second half of the session.

EUR exchange rates may be influenced primarily by Ukraine headlines. Additional signs that Russia is gearing up for a massive new offensive could weigh on the Euro.

Top EUR data releases:

Feb 14 EUR GDP (Q4)

Feb 15 EUR Balance of Trade (Dec)

Feb 15 EUR Industrial Production (Dec)

 

USD – US Dollar Dented by Bullish Trade

The US Dollar fluctuated this week. Cautious comments from Federal Reserve Chair Jerome Powell offset some early gains at the start of the week. A risk-on impulse then kept a lid on the ‘Greenback’ through the latter half of the week, despite some hawkish comments from other Fed policymakers.

Centre stage next week will undoubtedly be the US consumer price index. Another deceleration in inflation last month could see the US Dollar come under heavy selling pressure.

Top USD data releases:

Feb 14 USD Inflation Rate (Jan)

Feb 15 USD Retail Sales (Jan)

Feb 15 USD Industrial Production (Jan)

 

GBP – Pound Buoyed by Hawkish BoE Commentary

The Pound trended broadly higher in the first half of this week, underpinned by hawkish commentary from Bank of England (BoE) policymaker Catherine Mann in addition to forecasts that the UK may avoid a recession in 2023. Additional hawkish comments from BoE Governor Andrew Bailey helped to reinforce these gains in the latter half of the week. While GBP investor largely shrugged of the UK’s latest GDP figures on Friday, despite revealing the country avoided a recession at the end of 2022.

Turning to next week, the publication of the UK’s latest CPI figures are likely to be a key focus for GBP investors. Could another double-digit inflation reading bolster BoE rate hike bets and lift the Pound?

Top GBP data releases:

Feb 14 GBP Unemployment Rate (Dec)

Feb 15 GBP Inflation Rate (Jan)

Feb 17 GBP Retail Sales (Jan)

 

AUD – Australian Dollar Finds Fleeting Gains Following Hawkish RBA Rate Hike

The Australian Dollar shot higher at the start of this week, with the bulk of the currency’s gains coming after a hawkish interest rate decision by the Reserve Bank of Australia (RBA). However, the ‘Aussie’s star then faded through the latter half of the session as market risk appetite soured.

Australia’s latest jobs report will be in the spotlight for AUD investors next week. Expect to see AUD exchange rates slump if employment growth declined for a second month.

Top AUD data releases:

Feb 14 AUD NZB Business Confidence (Jan)

Feb 16 AUD Unemployment Rate (Jan)

Feb 16 AUD RBA Lowe Speech

 

ZAR – Rand Slumps ahead of ‘Uninspired’ SONA

The South African Rand slumped through the first half of this week, the currency being pulled lower by domestic power woes and a stronger US Dollar. The Rand’s losses then accelerated ahead of President Cyril Ramaphosa’s State of the Nation Address (SONA), which failed to elicit investor confidence.

The publication of South Africa’s latest CPI figures will likely be the primary catalyst of movement for the Rand next week. Will another slowdown in inflation exert pressure on ZAR exchange rates?

Top ZAR data releases:

Feb 15 ZAR Inflation Rate (Jan)

Feb 15 ZAR Retail Sales (Dec)

 

CAD – Canadian Dollar Soars on Bumper Jobs Report

The Canadian Dollar got off to a strong start this week as the latest Ivey PMI smashed expectations. The ‘Loonie’ then skyrocketed at the end of the week as Canada’s reported a much larger-than-expected rise in employment growth last month.

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