Pound Rocked by Coronavirus Concerns, Euro Firms as ECB Proves Less Dovish Than Expected
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 Rebounds as ECB Less Dovish than Feared
The Euro initially struggled to attract support this week, as the single currency’s strong negative correlation with the US Dollar saw it falter as the latter surged. But the Euro was able to claw back these gains as the European Central Bank (ECB) concluded its latest policy meeting, striking a slightly less dovish outlook than markets had expected.
The publication of the Eurozone’s latest GDP figures will no doubt be the primary focus for EUR investors next week. Will a strong rebound in growth in the second quarter lend some support to the Euro?
Top EUR data releases:
Jul 26 EUR German IFO Business Climate (Jul)
Jul 30 EUR GDP (Q2)
Jul 30 EUR Inflation Rate (Jul)
USD – US Dollar Find Fleeting Gains amidst Fluctuating Risk Appetite
The US Dollar enjoyed strong support through the first half of this week, with USD exchange rates soaring to new multi-month highs as investors flocked to the safe-haven currency amidst a sharp deterioration in market sentiment. However, the ‘Greenback’ was unable to sustain these gains for long as the second half of the session brought with it a notable rebound in risk appetite.
It looks to be a busy session for USD investors next week with the Federal Reserve set to deliver its latest rate decision and the publication of the latest US GDP figures, with the former potentially stoking some notable volatility in the US Dollar depending on the tone struck by the Fed.
Top USD data releases:
Jul 27 USD Durable Goods Orders (Jun)
Jul 28 USD Fed Rate Decision
Jul 29 USD GDP (Q2)
GBP – Pound Slides amid Worrying Rise in Coronavirus Cases
The Pound plummeted to a six-month low at the start of this week, as an alarming surge in domestic coronavirus cases overshadowed the lifting of all remaining restrictions in England. However, Sterling may have drifted into oversold territory, with GBP exchange rates rebounding in the latter half of the week as traders sought to pick up a bargain.
Looking ahead, it’s likely that UK coronavirus concerns will continue to act as a key catalyst of movement for the Pound next week, with the currency likely to face additional headwinds if domestic cases continue to surge.
Top GBP data releases:
Jul 26 GBP BoE Vlieghe Speech
Jul 27 GBP CBI Distributive Trades (Jul)
AUD – Australian Dollar Rocked by Fluctuating Risk Appetite
The Australian Dollar traded in a wide range over the past week, with the risk-sensitive currency rising and falling in step with fluctuating market sentiment. Also influencing AUD exchange rates were domestic coronavirus developments, with the ‘Aussie’ being pressured by the news that 50% of Australia’s population is back in lockdown.
Turning to next week’s session, the publication of Australia’s consumer price index will be in the spotlight for AUD investors. Will a sharp rebound in inflation in the second quarter reflect positively on the ‘Aussie’?
Top AUD data releases:
Jul 28 AUD Inflation Rate (Q2)
Jul 29 AUD Business Confidence (Jul)
ZAR – South African Rand Fluctuates amid Mixed Market Mood
The South African Rand stumbled through the first half of this week’s session, with a prevailing risk-off mood and weaker-than-expected domestic inflation undermining the appeal of the Rand. While ZAR exchange rates rebounded in line with market sentiment in the latter half of the week, this upside was tempered by the South African Reserve Bank (SARB) as if struck a dovish tone in the wake of its latest policy meeting.
Looking ahead, economists are forecasting that South Africa will report another record surplus in next week’s trade figures, which could potentially bolster the appeal of the Rand.
Top ZAR data releases:
Jul 29 ZAR PPI (Jun)
Jul 30 ZAR Trade Balance (Jun)
CAD – Canadian Dollar Rallies amid Rebound in Oil Prices
The Canadian Dollar opened this week’s session in freefall, as the collapse of oil prices weighed heavily on the commodity-linked currency. However, demand for the ‘Loonie’ quickly recovered after WIT crude prices rebounded back above $70 a barrel.
The primary focus for CAD investors next week will be on Canda’s latest CPI print, with another strong inflation reading likely to reflect well on the ‘Loonie’ as it bolsters speculation the Bank of Canada (BoC) may need to start tightening its monetary policy.
Top CAD data releases:
Jul 28 CAD Inflation Rate (Jun)
Jul 30 CAD GDP (May)