Pound Undermined by Fiscal and Political Uncertainty, US Dollar Undermined in Upbeat 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 Undermined by Downbeat German Data

The Euro got off to a mixed start this week, with initial jitters regarding the conflict in Ukraine quickly being offset by a stronger-than-expected Eurozone PPI print. The single currency then struggled again in the latter half of the session as a rebound in the US Dollar, coupled with some underwhelming German data and European Central Bank (ECB) minutes weighed on EUR sentiment.

Looking ahead to next week, Ukraine developments may act as a key catalyst of movement for the Euro. With any escalation of the conflict likely to weigh on EUR sentiment.

Top EUR data releases:

Oct 12 EUR Industrial Production (Aug)

Oct 13 EUR German Inflation Rate Final (Sep)

Oct 14 EUR Balance of Trade (Aug)

 

USD – US Dollar Undermined by Bullish Mood

The US dollar faltered in the first half of this week as a clear risk-on bias limited demand for the safe-haven currency. A souring mood then allowed the ‘Greenback’ to claw back a good portion of these gains in mid-week trade, before the publication of the latest US payroll figures helped to reinforce this upside.

Centre stage next week will be the publication of the latest US consumer price index. Will another rise in US inflation propel the US Dollar higher?

Top USD data releases:

Oct 13 USD Inflation Rate (Sep)

Oct 14 USD Retail Sales (Sep)

Oct 14 USD Consumer Sentiment (Oct)

 

GBP – Pound Finds Fleeting Gains on Tax Cut U-Turn

The Pound initially strengthened this week as markets welcomed Chancellor Kwasi Kwarteng’s U-turn regarding tax cuts for high earners. However Sterling was placed back on the defensive later in the week amid a muted reaction to Liz Truss’s Conservative party speech and the threat of a UK credit rating downgrade.

The publication of the UK’s latest jobs report will likely be the main focus for GBP investors next week. Could a strong uptick in wage growth offer some support to the Pound?

Top GBP data releases:

Oct 11 GBP Unemployment Rate (Aug)

Oct 11 GBP Average Earnings (Aug)

Oct 12 GBP GDP (Aug)

 

AUD – Australian Dollar Undermined by Dovish RBA

The Australian Dollar got off to a poor start this week as AUD investors were disappointed by the Reserve Bank of Australia’s (RBA) decision to only raise interest rates by 25bps at its October policy meeting. This left the ‘Aussie’ unable to capitalise on the prevailing risk off mood, and open to further losses after data showed a surprise narrowing of Australia’s trade surplus in August.

The focus for AUD investors next week is likely to be on Australia’s latest business and consumer confidence figures. Will another improvement in sentiment reflect positively on the ‘Aussie’?

Top AUD data releases:

Oct 11 AUD Business Confidence (Sep)

Oct 12 AUD Consumer Confidence (Oct)

 

ZAR – Rand Bolstered by Risk-On Flows

The South African Rand trended broadly higher through the first half of this week, with the appeal of the emerging market currency being underpinned by a notable improvement in risk appetite. While the mood soured in the second half of the session, the Rand was able to cling to a good portion of its gains.

ZAR data remains thin on the ground next week, likely leaving movement in the Rand to remain tied to market risk appetite.

 

CAD – Canadian Dollar Muted Despite Oil Price Spike

The Canadian Dollar struggled to find any lasting gains through the first half of this week, the commodity-linked currency seeming unable to capitalise on the continued recovery in oil prices. The second half of the week then saw the release of Canada’s latest employment figures, where a surprise dip in unemployment lent some support to the ‘Loonie’.

In the absence of any notable CAD data releases next week, could we see movement in the ‘Loonie’ driven primarily by oil price dynamics?