Pound Nosedives amid UK Economic Woes, US Dollar Soars in Gloomy 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 Fluctuates as Eurozone Inflation Soars
The Euro traded in a wide range over the past week, with the single currency fluctuating through the first half of the week on the back of some dovish European Central Bank (ECB) comments as well as in the face of broad US strength. This volatility then persisted into the latter half of the week as the Eurozone’s latest CPI figures gave rise to concerns over inflation.
Turning to next week’s session, the focus for EUR investors looks to be on the publication of Germany’s latest industrial releases, with the Euro likely to appreciate if they print positively.
Top EUR data releases:
Oct 5 EUR Services PMI (Sep)
Oct 6 EUR German Factory Orders (Aug)
Oct 7 EUR German Industrial Production (Aug)
USD – US Dollar Rallies amid Gloomy Market Mood
The US Dollar roared higher this week, as Chinese growth concerns, coupled with fears the US might hit its debt ceiling, spooked investors and sent them flocking to the safe-haven ‘Greenback’. Reinforcing the jump in USD exchange rates was a rise in US Treasury yields in anticipation of an upcoming tapering announcement from the Federal Reserve.
Centre stage next week will be the publication of the latest US non-farm payroll release. Economists are forecasting a healthy rise in employment growth in September, but could another lacklustre reading bring the US Dollar’s bullish run to a screeching halt?
Top USD data releases:
Oct 4 USD Factory Orders (Aug)
Oct 5 USD ISM Non-Manufacturing PMI (Sep)
Oct 8 USD Non-Farm Payrolls (Sep)
GBP – Pound Tumbles as Fuel Crisis Exacerbates UK’s Economic Woes
The Pound was met by an aggressive selloff this week, with Sterling plunging sharply through the first half of the week as the UK’s fuel crisis raised additional questions over the UK’s economic resilience. GBP investors were particularly concerned by the threat of ‘stagflation’, with inflation continuing to surge and place more pressure on consumers, at a time when the UK growth looks to be stalling.
Looking ahead, its likely these concerns over growth are likely to persist into next week, as the UK seemingly lurches from one crisis to another.
Top GBP data releases:
Oct 5 GBP Services PMI (Sep)
AUD – Australian Dollar Fluctuates amid Souring Market Sentiment
The Australian Dollar traded erratically this week, with some better-than-expected domestic retail sales figures and a sharp souring of market sentiment, infusing some volatility in the currency through the first half of the week. However, the ‘Aussie’ was able to claw back some of its losses in latter half of the week on the back of some upbeat Chinese data.
Top of the agenda for AUD investors next week will be the Reserve Bank of Australia’s (RBA) latest interest rate decision. No policy changes are expected from the RBA this month, but some dovish forward guidance could send the Australian Dollar lower.
Top AUD data releases:
Oct 5 AUD Trade Balance (Aug)
Oct 5 AUD Retail Sales (Aug)
Oct 5 AUD RBA Interest Rate Decision
ZAR – South African Rand Stumbles in Risk Adverse Trade
The South African Rand was placed on the defensive this week, with investors largely shunning the emerging market currency amidst a prevailing risk-off mood. A stronger-than-expected trade balance was able to offer the Rand some brief respite in the second half of the week however.
In the absence of any notable ZAR economic releases next week, the direction of the Rand is likely to continue to be dictated by market sentiment, potentially leaving the currency vulnerable to additional losses.
CAD – Canadian Dollar Bolstered by Rising Oil Prices
The Canadian Dollar firmed against the majority of its peer this week, with the commodity-linked currency rising in tandem with oil prices, which climbed to a near three-year high.
The publication of Canada’s latest jobs report could provide an additional boost to the ‘Loonie’ next week, if it shows than domestic unemployment continued to trend lower in September.
Top CAD data releases:
Oct 5 CAD Trade Balance (Aug)
Oct 7 CAD Ivey PMI (Sep)
Oct 8 CAD Unemployment Rate (Sep)