Pound Rangebound amid Muted Budget Reaction, US Dollar Supported by Rising Treasury Yields
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 USD Strength
The Euro’s negative correlation with the US Dollar saw the single currency placed on the defensive through much of this week as the session was themed by broad USD strength. Also exerting pressure on the Euro were some lacklustre data releases, including a stalling of Eurozone inflation and a sharp drop in German retail sales growth.
In the spotlight next week, we have the European Central Bank’s (ECB) latest rate decision. No policy changes are expected this month, but a more upbeat outlook from the bank could help to boost the appeal of the Euro.
Top EUR data releases:
Mar 08 EUR German Industrial Production (Jan)
Mar 09 EUR GDP (Q4)
Mar 11 EUR ECB Rate Decision
USD – US Dollar Firms on Bullish Treasury Yields
The US Dollar ticked higher this week, with the currency garnering fresh support from the continued rise in US Treasury yields, which were boosted by US stimulus optimism and the hopes for a strong rebound in domestic growth this year. However it hasn’t all been plain sailing for the ‘Greenback’, with the currency facing some headwinds as the latest ISM non-manufacturing PMI underwhelmed.
Looking ahead, the focus for USD investors next week will likely be on the latest US consumer price index, in which a rise in inflation could bolster the US Dollar.
Top USD data releases:
Mar 10 USD Inflation Rate (Feb)
Mar 11 USD Initial Jobless Claims (6/Mar)
Mar 12 USD Consumer Sentiment (Mar)
GBP – Pound Muted in Subdued Budget Reaction
The Pound was mostly rangebound this week, straddling the line just below some key levels of resistance as markets reacted to Chancellor Rishi Sunak’s 2021 Budget. While GBP investors welcomed Sunak’s pledge to do ‘whatever it takes’ to support the UK’s economic recovery, his plans for a significant rise in corporation taxes proved a point of concern.
Turning to next week, the publication of the UK’s latest monthly GDP reading will be watched closely by GBP investors as it will reveal just how big a hit the UK economy took from the latest lockdown.
Top GBP data releases:
Mar 12 GBP GDP (Jan)
Mar 12 GBP Industrial Production (Jan)
Mar 12 GBP Trade Balance (Jan)
AUD – Australian Dollar Weakens in Spite of Positive Data
The Australian Dollar was on the back foot through this week’s trading session, mostly in response to a tepid market mood and broad USD strength. This overshadowed some positive domestic data, which included a larger-than-expected expansion of GDP in the last quarter of 2020 as well as a record trade surplus in January.
The publication of Australia’s latest business and consumer confidence figures could offer some support to AUD exchange rates next week, on the assumption that sentiment will have continued to improve as Australia continues to ease its coronavirus restrictions.
Top AUD data releases:
Mar 09 AUD Business Confidence (Feb)
Mar 09 AUD Consumer Confidence (Mar)
ZAR – Rand Moves in Line with Shifting Risk Appetite
The South African Rand got off to a poor start this week in response to weak market risk appetite as well as a lacklustre factory PMI. However, the Rand was able to claw back most of its losses in the latter half of the week as the market mood showed signs of improvement.
Looking ahead to next week, the spotlight will be on South Africa’s latest GDP figures. Will robust growth at the end of 2020 help to prop up ZAR exchange rates?
Top ZAR data releases:
Mar 09 ZAR GDP (Q4)
Mar 11 ZAR Manufacturing Production (Jan)
Mar 11 ZAR Business Confidence (Q1)
CAD – Canadian Dollar Supported by Robust Oil Prices
The Canadian Dollar rallied this week, with the commodity-linked currency being carried higher by an uptick in oil prices. However, the ‘Loonie’ faced a hiccup in the first half of the week after the latest domestic GDP release reported that growth almost ground to a halt in December.
Turning to next week, CAD investors will be kept busy by the latest rate decision from the Bank of Canada (BoC) and jobs report, with the latter potentially weighing on CAD exchange rates if it shows any rise in unemployment last month.
Top CAD data releases:
Mar 10 CAD BoC Rate Decision
Mar 12 CAD Unemployment Rate (Feb)