Pound Tumbles amidst Mixed Data, US Dollar Soars in Risk-Off 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.

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EUR – Euro Side-lined by USD Strength

The Euro initially got off to a relatively strong start this week, with some robust GDP and inflation releases, alongside increased optimism over Europe’s coronavirus situation, reflecting well on the single currency. However, EUR exchange rates then faltered in the latter half of the week, as a result of the Euro’s strong negative correlation with the US Dollar.

Top of the agenda for EUR investors next week will be the Eurozone’s latest PMI figures, in which an expected slowing of private sector activity this month could dent the Euro at the start of the session.

Top EUR data releases:

Aug 23 EUR Manufacturing PMI (Aug)

Aug 23 EUR Services PMI (Aug)

Aug 23 EUR Consumer Confidence (Aug)

 

USD – US Dollar Skyrockets amid Collapse in Market Sentiment

The US Dollar rocketed higher against the majority of its peers this week as a notably gloomy mood -in light of fresh coronavirus uncertainty and geopolitical tensions- saw investors favour the safe-haven currency. These gains were further reinforced by the minutes from the Federal Reserve’s latest policy meeting, as they revealed that policymakers have finally begun formal tapering discussions.

Turning to next week’s session, the US Dollar’s march higher could face some hurdles, as economists forecast the latest US durable goods orders release will report a sharp contraction of order growth in July.

Top USD data releases:

Aug 25 USD Durable Goods Orders (Jul)

Aug 27 USD Personal Spending (Jul)

Aug 27 USD PCE Price Index (Jul)

 

 

GBP – Pound Slumps as UK Data Fails to Resonate

The Pound found itself on the defensive though much of the past week, as a series of high-profile UK data releases got a cool response from GBP investors. This included the UK’s consumer price index, which reported a sharper-than-expected slowing of domestic inflation last month, dampening the prospects of the Bank of England (BoE) tightening its monetary policy in the near-term.

Looking ahead to next week’s session, the focus for GBP investors will likely be on the UK’s latest PMI releases. Will a robust expansion in the private sector in August, following the full reopening of the UK economy, help to boost the Pound?

Top GBP data releases:

Aug 23 GBP Manufacturing PMI (Aug)

Aug 23 GBP Services PMI (Aug)

 

 

AUD – Australian Dollar Nosedives in Risk-Adverse Environment

The Australian Dollar suffered an aggressive selloff this week, with investors shunning the risk-sensitive currency as a bearish market mood prevailed. This even saw AUD investors shrug off the publication of Australia’s latest employment figures, in spite of July’s release reporting that domestic unemployment fell to a 12-year low.

In the spotlight for AUD investors next week will be the publication of Australia’s latest retail sales figures, with an expected slowing of sales growth last month potentially denting the appeal of the ‘Aussie’.

Top AUD data releases:

Aug 27 AUD Retail Sales (Jul)

 

ZAR – South African Rand Pummelled by Risk-Off Mood

The South African Rand plummeted this week, with the emerging market currency struggling to attract investors in light of the souring market mood. These losses were further reinforced by data showing a sharp slowing of retail sales growth in June.

The publication of South Africa’s latest jobs report will no doubt be for the focus for ZAR investors next week, with the Rand likely to face an uphill battle if unemployment rose again in the second quarter.

Top ZAR data releases:

Aug 24 Unemployment Rate (Q2)

 

CAD – Canadian Dollar Slumps as Oil Prices Plunge

The Canadian Dollar retreated this week, as the appeal of the oil-sensitive ‘Loonie’ was dented by a sharp drop in crude prices, which more than offset the publication of some strong domestic inflation figures.

In the absence of any notable CAD data releases next week, movement in the Canadian Dollar is likely to closely track the direction of oil prices.