Pound Storms Higher on BoE Rate Hike Expectations, US Dollar Bolstered by Risk-Off Sentiment
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 Dovish ECB Comments
The Euro got off to a poor start this week, with the single currency being undermined by a weak industrial production print from the Eurozone. Applying additional pressure to the single currency were some dovish commentary from European Central Bank (ECB) officials, most notably President Christine Lagarde, who suggested a premature tightening of policy would ‘cause far more harm than it would do any good’.
The latest Eurozone PMI figures will no doubt be the focus for EUR investors next week, with their release potentially weighing on the Euro if economic activity in the bloc slowed this month as forecast.
Top EUR data releases:
Nov 23 EUR Manufacturing PMI (Nov)
Nov 23 EUR Services PMI (Nov)
Nov 24 EUR German IFO Business Climate (Nov)
USD – US Dollar Buoyed by Downbeat Mood
The US Dollar trended higher this week, as the appeal of the safe-haven currency was bolstered amidst deteriorating market risk-appetite. This uptick in the ‘Greenback’ was also reinforced by some positive data as the latest US retail sales figures beat forecasts.
Turning to next week’s session, the publication of the minutes from the Fed’s November policy meeting will a key focus for USD investors, as they look for any signs there might be appetite for hiking interest rates earlier than mid-2022.
Top USD data releases:
Nov 24 USD Durable Goods Orders (Oct)
Nov 24 USD GDP (Q3)
Nov 24 USD FOMC Minutes
GBP – Pound Surges on BoE Rate Hike Speculation
The Pound enjoyed strong support this week, with the currency being underpinned by rising expectations the Bank of England (BoE) will hike interest rates in December. This came in response to data showing a larger-than-expected drop in unemployment in September, as well as the UK’s consumer price index, which reported inflation surged to a decade high in October.
Looking ahead, it’s likely that the UK’s PMI releases will act as the primary catalyst of movement in the Pound next week. Will a slowing of activity in the manufacturing and services sectors unravel some of Sterling’s recent gains?
Top GBP data releases:
Nov22 GBP CBI Industrial Trends Orders (Oct)
Nov 23 GBP Manufacturing PMI (Nov)
Nov 23 GBP Services PMI (Nov)
AUD – Australian Dollar Undermined by Surge in Unemployment
The Australian Dollar trended broadly lower this week, with the risk-sensitive currency being dented by a prevailing risk-off mood. These losses were also compounded by some dovish comments by Reserve Bank of Australia (RBA) Governor Philip Lowe, in which he suggested a rate hike next year is unlikely.
The publication of Australia’s latest PMI releases will be the main focus for AUD investors next week, with the ‘Australian Dollar poised to strengthen if the reopening of more of the country results in an acceleration of growth in the private sector.
Top AUD data releases:
Nov 22 AUD Manufacturing PMI (Nov)
Nov 22 AUD Services PMI (Nov)
Nov 26 AUD Retail Sales (Oct)
ZAR – Rand Tumbles on TRY Contagion Fears
The South African Rand fell sharply this week, as the emerging market currency was rocked by contagion fears following the collapse of the Turkish Lira. Also pressuring the Rand was South African Reserve Bank’s (SARB) latest interest rate decision, as while the bank hiked rates this month, it also indicated that future hikes may be slower than previously forecast.
The Rand could claw back some ground next week however, if South Africa’s latest business confidence figures report an improvement in morale in the fourth quarter.
Top ZAR data releases:
Nov 25 ZAR PPI (Oct)
Nov 26 ZAR Business Confidence (Q4)
CAD – Canadian Dollar Stumbles as Oil Prices Slump
The Canadian Dollar fell back against the majority of its peers this week as the appeal of the commodity-linked currency was undermined by a pullback in oil prices. This downturn in the ‘Loonie’ even came in spite of data showing that domestic inflation rocketed to an 18-year high in October.
In the absence of any notable CAD data releases next week, the Canadian Dollar is likely to continue to be influenced primarily by oil prices, potentially leading to further losses if this weakness persists.