US Dollar Bolstered by Risk-Off Trade, Euro Dented by Europe’s Coronavirus Resurgence

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 Covid Fears

The Euro was pressured by Covid concerns throughout this week, with EUR investors fearing Germany could follow Austria in announcing a national lockdown. While some stronger-than-expected Eurozone PMI releases provided some support for the single currency, this was quickly undermined by a drop in German business morale.

The publication of the Eurozone’s consumer price index will be in the spotlight for EUR investors next week as they brace for another jump in inflation.

Top EUR data releases:

Nov 29 EUR German Inflation Rate (Nov)

Nov 30 EUR Inflation Rate (Nov)

Dec 3 EUR Retail Sales (Oct)

 

USD – US Dollar Firms in Bearish Trade

The US Dollar enjoyed strong support this week, as the collapse of the Turkish Lira and renewed Covid concerns, saw investors favour the safe-haven currency. This uptick in the ‘Greenback’ was reinforced by some positive US data as well as the minutes from the Federal Reserve’s November policy meeting, as they indicated some policymakers may be open to accelerating the pace of monetary tightening.

Centre stage next week will be the publication of the latest US non-farm payroll figures, as another robust print in November is likely to bolster Fed rate hike bets.

Top USD data releases:

Dec 1 USD ISM Manufacturing PMI (Nov)

Dec 3 USD Non-Farm Payrolls (Nov)

Dec 3 USD ISM Non-Manufacturing PMI (Nov)

 

GBP – Pound Softens Despite Update Data

The Pound found itself on the defensive for the majority of this week, with GBP investors largely shrugging off better-than-expected PMI releases and a record jump in the CBI’s industrial orders balance book this month. This downturn in Sterling sentiment appeared driven primarily by Brexit jitters, amidst concerns negotiations regarding the Northern Ireland protocol will drag into 2022.

Looking ahead, Sterling could find some limited support if the UK’s finalised PMIs print positively, but it’s likely that BoE rate speculation and Brexit developments will continue to act as the primary catalysts for the Pound next week.

Top GBP data releases:

Dec 1 GBP Manufacturing PMI (Nov)

Dec 3 GBP Services PMI (Nov)

 

 

AUD – Australian Dollar Undermined by Risk-Off Trade

The Australian Dollar trended broadly lower this week, as the appeal of the currency was undermined by a prevailing risk-off mood. This downtrend remained firmly in place through the latter half of the week, in spite of Australia’s latest retail sales figures printing well above expectations.

In focus for AUD investors next week will be the publication of Australia’s third quarter GDP report. Expect this to weaken the Australian Dollar as the lockdown measures in place at the time are likely to result in a sharp contraction of growth.

Top AUD data releases:

Dec 1 AUD GDP (Q3)

Dec 2 AUD Trade Balance (Oct)

Dec 2 AUD Retail Sales (Oct)

 

ZAR – Rand Plunges on New Covid Variant Fears

The South African Rand initially came under pressure this week as a result on contagion from the further collapse of the Turkish Lira. The Rand then came under even more pressure in the latter half of the week, following the news that a worrying new Covid variant had been discovered in South Africa.

In addition to Covid concerns, the Rand is also likely to be influenced by the publication of South Africa’s latest employment report next week, in which a rise in unemployment in the third quarter is likely to reflect negatively on ZAR exchange rates.

Top ZAR data releases:

Nov 30 ZAR Unemployment Rate (Q3)

Nov 30 ZAR Trade Balance (Oct)

 

CAD – Canadian Dollar Rocked by Fluctuating Oil Prices

The Canadian Dollar got off to a poor start this week, as a drop in oil prices weakened the appeal of the commodity-linked currency. However, a subsequent rebound in WTI crude prices in the latter half of the session helped the ‘Loonie’ to pare its losses.

The publication of Canada’s latest GDP figures will no doubt be the focus for CAD investors next week, with the Canadian Dollar likely to strengthen if economic growth rebounded in the third quarter as expected.

Top CAD data releases:

Nov 30 CAD GDP (Q3)