Pound Sees Dramatic Swings amid Fiscal Policy Concerns, US Dollar Strikes to 20-Year High.
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 amid Pipeline Concerns
Trade in the Euro was mixed this week as strong hints from the European Central Bank (ECB) that is will carry on with its current pace of monetary tightening was offset by the news of deliberate sabotage of the Nord Stream gas pipelines. The publication of the Eurozone’s latest CPI figures then provided some additional support to the single currency at the end of the week after reporting inflation in the bloc climbed into double digits for the first time.
The release of Germany’s latest industrial data could drive movement in the Euro next week. With another contraction in factory orders potentially dragging on EUR exchange rates.
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 Strikes New 20-Year High in Uncertain Trade
The US dollar was propelled to a new two-decade high in the first half of this week, with highly volatile movement in the currency market and Federal Reserve rate hike bets underpinning demand for the safe-haven currency. However the ‘Greenback’ was forced off its best levels in the second half of the week amid an improving market mood.
The focus for USD investors next week is likely to be on the latest non farm payroll figures. Could another robust increase in US job growth bolster Fed rate hike expectations and propel the US Dollar higher?
Top USD data releases:
Oct 3 USD ISM Manufacturing PMI (Sep)
Oct 5 USD ISM Non-Manufacturing PMI (Sep)
Oct 7 USD Non-Farm Payrolls (Sep)
GBP – Pound Rocked by Budget Fallout
Concerns over UK fiscal policy led to wild swings in the Pound this week. This began with the GBP/USD exchange rate striking a record low at the start of the week, before quicky rebounding on hopes for an intervention by the Bank of England (BoE). The eventual intervention into the UK bond market then allowed Sterling to rebound later in the week.
Looking ahead, barring a U-turn from the UK government it’s likely that the Pound will continue to trade erratically in the near-term.
Top GBP data releases:
Oct 3 GBP Manufacturing PMI (Sep)
Oct 5 GBP Services PMI (Sep)
AUD – Australian Dollar Undermined by Risk-Off Trade
The Australian Dollar trended lower through the first half of the week, as a prevailing risk-off mood dented the appeal of the currency. A rebound in risk sentiment, coupled with rising commodity prices then allowed the ‘Aussie’ to claw back some of these losses later in the week.
The Reserve Bank of Australia’s (RBA) latest interest rate decision will be in the spotlight next week. Another 50bps rate hike is forecast, but could some dovish forward guidance lead the Australian Dollar to weaken?
Top AUD data releases:
Oct 4 AUD RBA Interest Rate Decision
Oct 6 AUD Balance of Trade (Aug)
Oct 7 RBA Financial Stability Review
ZAR – Rand Fluctuates amid Mixed Market Mood
The South African Rand traded in a wide range this week as the emerging market currency cause caught up in the wider market jitters surrounding the Pound. However, the Rand was then able to rebound in the latter half of the week as a pullback in the US Dollar helped to bolster market risk appetite.
In the absence of any major ZAR data releases next week, any movement in the Rand may be driven primarily by market risk appetite, potentially leading to more volatility.
CAD – Canadian Dollar Rally Cut Short by Underwhelming GDP Release
A rebound in oil prices helped the Canadian Dollar trend higher through the first half of this week. However, a subsequent downturn in crude prices, saw CAD exchange rates falter in the latter half of the week, despite stronger-than-expected domestic GDP figures.
The publication of Canada’s latest employment figures are likely to be a key focus for CAD investors next week. Could another rise in unemployment in September undermine the ‘Loonie’?
Top CAD data releases:
Oct 5 CAD Trade Balance (Aug)
Oct 6 CAD Ivey PMI (Sep)
Oct 7 CAD Unemployment Rate (Sep)