Pound Rocked by UK Political Chaos, US Dollar Slumps in Bullish 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 Dented by Ukraine Concerns

The Euro struggled to attract support through the first part of this week, with fresh concerns over the war in Ukraine taking their toll on the single currency. EUR exchange rates then began to firm later in the session as the single currency was bolstered by its negative correlation with the US Dollar.

The European Central Bank’s (ECB) latest interest rate decision will be centre stage next week. While another 75bps interest rate hike is largely priced in, some hawkish forward guidance could help to lift the Euro.

Top EUR data releases:

Oct 24 EUR Manufacturing PMI (Oct)

Oct 24 EUR Services PMI (Oct)

Oct 27 EUR ECB Interest Rate Decision.

 

USD – US Dollar Slides amid Upbeat Market Mood

The US Dollar slumped through the first half of this week as a prevailing risk-on mood saw investors shun the safe-haven currency. After an attempted rebound in mid-week trade, fresh risk-on flows saw the US Dollar resume its losses in the latter half of the session.

USD investors will be focused on the publication of the latest US GDP release next week. Analysts are predicting a sharp rebound in growth in the third quarter, which could strengthen the US Dollar.

Top USD data releases:

Oct 27 USD Durable Goods Orders (Sep)

Oct 27 USD GDP (Q3)

Oct 28 USD Core PCE Price Index (Sep)

 

GBP – Pound Rocked by Political Drama

The Pound continued to trade with notable volatility this week, with the currency initially spiking after Chancellor Jeremey Hunt scrapped most of the mini-budget. Questions over Liz Truss’s future as PM then lead to choppy trade through the middle of the week, before her resignation provided a bump to Sterling on Thursday.

UK political developments are likely to continue to act as a key catalyst of movement for the Pound next week, with more volatility expected as Conservative MPs vote for their fourth leader in as many years.

Top GBP data releases:

Oct 24 GBP Manufacturing PMI (Oct)

Oct 24 GBP Services PMI (Oct)

Oct 25 GBP CBI Business Optimism (Oct)

 

AUD – Australian Dollar Rally Supported by Hawkish RBA

The Australian Dollar opened this week on strong footing, with the currency being carried higher amid a risk-on mood. The ‘Aussie’s gains were reinforced thanks to some hawkish minutes from the Reserve Bank of Australia (RBA).

Australia’s consumer price index is likely to be the key focus for AUD investors next week. Could a surge in inflation in the third quarter bolster RBA rate hike bets and strengthen the ‘Aussie’?

Top AUD data releases:

Oct 23 AUD Manufacturing PMI (Oct)

Oct 23 AUD Services PMI (Oct)

Oct 26 AUD Inflation Rate (Q3)

 

ZAR – Rand Gains Undermined by Power Concerns

The South African Rand initially firmed this week amid an uptick in market risk appetite. While markets remained risk-on through most of the session, South Africa’s ongoing power woes tempered subsequent gains for the emerging market currency.

South Africa’s Finance Minister Enoch Godongwana is set to deliver his Medium-Term Budget Policy Statement next week. ZAR investors will be looking to Godongwana to outline plans to boost growth and aid beleaguered state utility Eskom.

Top ZAR data releases:

Oct 26 ZAR Medium-Term Budget Statement

 

CAD – Canadian Dollar Firms amid Rebound in Oil

The Canadian Dollar initially stumbled this week, with the commodity-linked currency coming under pressure as WTI crude prices fell to a two-week low. However CAD exchange rates then rebounded in the latter half of the session, amidst strengthening oil prices and hotter-than-expected domestic inflation.

The Bank of Canada’s (BoC) latest interest rate decision will be in the spotlight for CAD investors next week. Will a 50bps rate hike help to underpin support for the ‘Loonie’?

Top CAD data releases:

Oct 26 CAD BoC Interest Rate Decision

Oct 28 CAD GDP (Sep)