US Dollar Appreciates in Risk-Off Trade, Pound Struggles to Consolidate Gains in Spite of Upbeat Data
Find out how the major currencies have been performing and what movement we could see in the days ahead with our weekly currency update.
EUR – Euro Undermined by German Political Uncertainty
The Euro was placed on the back foot this week, with the single currency falling through the first half of the session in the face of rising uncertainty in Germany ahead of the upcoming general election. The Euro then maintained this downward trajectory through the latter half of the week due to the strength of the US Dollar.
The publication of the Eurozone’s latest PMI figures will likely act as the main catalyst for the Euro next week, with EUR exchange rates potentially being dented if activity in the bloc’s private sector continued to slow this month.
Top EUR data releases:
Sep 22 EUR Consumer Confidence (Sep)
Sep 23 EUR Manufacturing PMI (Sep)
Sep 23 EUR Services PMI (Sep)
USD – US Dollar Rebounds from Soft Inflation Reading
Trade in the US Dollar has been volatile over the past week, following the publication of the US consumer price index, which revealed the first slowing of domestic inflation in 10 months. While the CPI release initially sent USD exchange rates reeling, the ‘Greenback’ quickly picked itself back up amidst a prevailing risk-off mood.
Top of the agenda next week will undoubtedly be the Fed’s interest rate decision, with USD investors eager to see if the US bank is ready to announce when it will begin tapering its stimulus programme. Expect the US Dollar to tumble if the Fed remains tight lipped.
Top USD data releases:
Sep 22 USD Fed Interest Rate Decision
Sep 23 USD Manufacturing PMI (Sep)
Sep 23 USD Services PMI (Sep)
GBP – Pound Fluctuates Despite Upbeat Data
The Pound traded in a wide range this week. The currency found some support from some upbeat domestic data releases, included the UK’s latest CPI, which reported inflation jumped to a nine-year high last week. However, Sterling was simultaneously undermined by uncertainty over Boris Johnson’s cabinet reshuffle as well as ongoing concerns over the UK’s economic resilience.
It’s safe to assume the focus for GBP investors next week will be the BoE’s latest interest rate decision, with the Pound set to firm if the bank drops some hints regarding its tapering plans.
Top GBP data releases:
Sep 23 GBP Manufacturing PMI (Sep)
Sep 23 GBP Services PMI (Sep)
Sep 23 GBP BoE Interest Rate Decision
AUD – Australian Dollar Dented by RBA Lowe’s Dovish Comments
The Australian Dollar got off to a poor start this week, following comments from Reserve Bank of Australia (RBA) Governor Philip Lowe, who quashed hopes that interest rates could rise before 2024. The ‘Aussie’ then remained under pressure through the latter half of the week, after Australia’s latest jobs report revealed a sharp drop off in employment last month.
The publication of the minutes from the RBA’s latest policy meeting could see the Australian Dollar extend its losses into next week’s session should they reinforce the RBA’s dovish stance.
Top AUD data releases:
Sep 21 AUD RBA Minutes
Sep 23 AUD Manufacturing PMI (Sep)
Sep 23 AUD Services PMI (Sep)
ZAR – South African Rand Slumps on Abysmal Retail Sales Reading
The South African Rand spent most of this week’s session on the back foot, with the emerging market currency initially facing some pressure as a result of weak market risk appetite. These losses then accelerated in the wake of South Africa’s latest retail sales reading, after a dramatically larger-than-expected slump in sales growth highlighted the economic damaged caused by the country’s recent riots.
Turning to next week’s session the spotlight will be on the South African Reserve Bank’s (SARB) latest policy meeting, with a cautious outlook from the bank potentially extend the Rand’s losses.
Top ZAR data releases:
Sep 22 ZAR Inflation Rate (Aug)
Sep 23 ZAR SARB Interest Rate Decision
CAD – Canadian Dollar Bolstered by Surge in Inflation
The Canadian Dollar struck higher this week, rallying on the back of Canada’s latest CPI figures, after they reported domestic inflation rocketed up to a new eight-year high. Reinforcing this upside in the ‘Loonie’ was also a solid rise in oil prices throughout the week.
Looking ahead, the focus for CAD investors next week looks to be on Canada’s latest retail sales figures. Will a contraction of sales growth at the start of the third quarter undermine the Canadian Dollar?
Top CAD data releases:
Sep 23 CAD Retail Sales (Jul)