Pound Storms High on Budget U-Turn Rumours, US Dollar Spikes on Hotter-than-Expected Inflation Release.

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 Undermined by Ukraine Concerns

The Euro initially stumbled this week after Russia launched a wave of missiles at Ukraine, stoking fears an escalation of the conflict could place even more pressure on the Eurozone economy. Attempts by the single currency to recover in the latter half of the week proved short lived as Ukraine developments compounded European energy concerns.

Looking ahead to next week, the Euro could face an uphill battle if the latest ZEW surveys from Germany report another slump in economic sentiment this month.

Top EUR data releases:

Oct 18 EUR German ZEW Economic Sentiment Index (Oct)

Oct 19 EUR Inflation Rate (Sep)

Oct 21 EUR Consumer Confidence (Oct)

 

USD – US Dollar Unable to Sustain Post-CPI Gains

The US dollar ticked lower this week, after only finding fleeting gains on the back of a stronger-than-expected US inflation print. This downturn in USD exchange rates appeared to be driven by a pullback in US Treasury yields and fluctuating Federal Reserve rate hike bets.

With only mid-tier US date scheduled for next week, the direction of the US Dollar may be driven primarily by market risk appetite. Will a cautious mood help to push the ‘Greenback’ higher?

Top USD data releases:

Oct 18 USD Industrial Production (Sep)

Oct 20 USD Initial Jobless Claims (15/Oct)

 

GBP – Pound Soars on Budget U-Turn Speculation

The Pound traded in a wide range again this week, with the currency initially fluctuating amid confusion over when the Bank of England (BoE) would conclude it emergency bond purchases. The latter half of the week then saw Sterling race higher in response to rumours a larger U-turn on Chancellor Kwasi Kwarteng’s mini-budget was on the table.

The publication of the UK’s latest CPI figures is expected to report domestic inflation accelerated again in September. Will resulting cost of living concerns drag on the Pound or could BoE rate hike bets offer some support to Sterling?

Top GBP data releases:

Oct 19 GBP Inflation Rate (Sep)

Oct 21 GBP Retail Sales (Sep)

 

AUD – Australian Dollar Undermined by Dovish RBA

The Australian Dollar opened this week on the defensive, as the AI group’s services index reported an unexpected contraction in service sector growth last month. The ‘Aussie’ then continued to push lower through the remainder of the week as the high-yield currency was undermined by a prevailing risk-off mood.

Australia’s latest jobs report is likely to be the highlight for AUD investors next week. Could a drop in domestic unemployment offer some support to the Australian Dollar?

Top AUD data releases:

Oct 18 AUD RBA Meeting Minutes

Oct 20 AUD Unemployment Rate (Oct)

 

ZAR – Rand Slips as Risk-On Mood Prevails

The South African Rand struggled to attract support through last week’s session as demand for the emerging market currency was undermined by risk-off flows. Ongoing power cuts further subdued ZAR exchange rates.

Turning to next week’s session, South Africa’s latest CPI figures could weaken the Rand if they report inflation continued to fall in September.

Top ZAR data releases:

Oct 19 ZAR Inflation Rate (Sep)

 

CAD – Canadian Dollar Pressured by Sliding Oil Prices

The Canadian Dollar trended broadly lower over the past week. The oil-linked currency coming under pressure amid a sustained drop in crude prices as an OPEC report suggested global demand is likely to remain weak.

Looking ahead, an expected slowing of domestic inflation last month could act as a headwind for the ‘Loonie’ next week. If it is seen as persuading the Bank of Canada (BoC) to further decelerate its current monetary tightening cycle.

Top CAD data releases:

Oct 19 CAD Inflation Rate (Sep)

Oct 21 CAD Retail Sales (Aug)