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Second Wave Fears Drive USD Strength

Second Wave Fears Drive USD Strength

EUR – Euro Stumbles as Eurozone Recovery Runs out of Momentum.

The Euro fell back this week, with worries over an economic slowdown amidst Europe’s coronavirus resurgence weighing on the single currency. These concerns were highlighted by the bloc’s latest PMI figures which revealed economic activity came to a virtual standstill in September.

Coming up next week, the focus for EUR investors is likely to be on the Eurozone’s consumer price index, with the Euro set to fall if the bloc suffered another month of deflation in September.

Top EUR data releases:

Sep 29 EUR German Inflation Rate (Sep)

Sep 30 EUR Inflation Rate (Sep)

Oct 1 EUR Unemployment Rate (Aug)


USD – US Dollar Surges in Jittery Trade

The US Dollar skyrocketed this week, being catapulted higher by surging safe-haven demand. This was of course tied to the renewed concerns over a second wave of coronavirus infections and fears it could derail the global economic recovery.

Looking ahead, the US Dollar is likely to continue to benefit from safe-haven flows next week, with additional gains potentially being driven by the latest US payroll release if US unemployment continued to fall this month.

Top USD data releases:

Sep 30 USD GDP (Q2)

Oct 3 USD ISM Manufacturing PMI (Sep)

Oct 2 USD Non-Farm Payrolls (Sep)


GBP – Pound Bolstered by Government’s Winter Economy Plan

The Pound initially stumbled this week, with the announcement of new coronavirus restrictions and threat of stricter measures stoking concerns over the UK’s economic recovery. However, Sterling bounced back in the latter half of the week as Chancellor Rishi Sunak announced a new job support scheme on Thursday.

Turning to next week’s session, we could see the Pound infused with fresh volatility as the risk of more coronavirus restrictions and Brexit uncertainty will keep GBP investors on their toes.

Top GBP data releases:

Sep 29 GBP Brexit Talks

Sep 30 GBP GDP (Q2) 

Oct 1 GBP Manufacturing PMI (Sep)


AUD – Australian Dollar Tumbles in Risk-Off Trade

The Australian Dollar fell sharply this week, with investors shunning the risk-sensitive currency in response to renewed coronavirus concerns. Adding to the ‘Aussie’s woes were suggestions from the Reserve Bank of Australia (RBA) that a lower AUD exchange rate would benefit the Australian economy. 

Looking ahead, it’s likely the Australian Dollar will remain vulnerable to additional losses as the risk-off tone looks to remain firmly in place for the foreseeable future. 

Top AUD data releases:

Sep 30 AUD ANZ Business Confidence (Sep)

Oct 2 AUD Retail Sales (Aug)


ZAR – Rand Battered by Risk aversion

The South African Rand slumped to a one-month low this week as the emerging market currency fell victim to jittery trade, with fears over the global coronavirus resurgence and fresh tensions between the US and China bruising market risk sentiment.

With coronavirus concerns likely to continue dominating headlines, this downtrend in the Rand is likely to persist through next week’s session, unless we see a particularly strong domestic inflation reading.  

Top ZAR data releases:

Sep 30 ZAR inflation Rate (Aug)


CAD – Canadian Dollar Weakens as Oil Prices Slip

The Canadian Dollar was placed on the defensive this week as the appeal of the commodity-linked currency was undermined by a dip in oil prices. This drop in the ‘Loonie’ was also accelerated by election speculation as rival parties dismissed Justin Trudeau’s ‘ambitious’ recovery plan.

Looking ahead, could a stronger-than-expected pick up in GDP in July help to buoy the Canadian Dollar nest week? 

Top CAD data releases:

Sep 29 CAD PPI (Aug)

Sep 30 CAD GDP (Jul)


ILS – Shekel Slumps in Lockdown

The Israeli Shekel fell sharply this week, with the currency weakened by the national lockdown and concerns that the government could impose further restrictions on businesses in an effort to halt the spread of the coronavirus.

Turning to next week’s session, it looks likely we will see the ILS selling bias remain in place as the lockdown continues.

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