US Dollar Fluctuates Wildly as Fed Hikes Rates by 75bps, BoE Rate Hike Helps Reverse Pound’s Initial Losses
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 European Energy Concerns
The Euro initially strengthened this week, buoyed by some hawkish comments from a European Central Bank (ECB) policymaker. But the single currency then faltered in the second half of the week, amidst fresh concerns over Europe’s energy security after Gazprom more than halved gas exports to Germany.
The latest preliminary Eurozone PMIs will likely drive movement in the Euro next week. Will another robust month of growth in the bloc’s private sector buoy EUR exchange rates?
Top EUR data releases:
Jun 22 EUR Manufacturing PMI (Jun)
Jun 22 EUR Services PMI (Jun)
Jun 24 EUR German IFO Business Climate (Jun)
USD – US Dollar Runs Out of Steam as Fed Reins in Rate Hike Bets
The US Dollar stormed out of the gate this week, with global recession fears and expectations of a 75bps rate hike from the Federal Reserve turbocharging the currency. While the Fed delivered the jumbo rate hike, its less hawkish than expected forward guidance triggered a sharp correction in USD exchange rates in the latter half of the week.
The only US data of note next week will be the latest S&P PMIs. While not as influential as the ISM releases, the preliminary figures could dent the US Dollar if they report a weakening of US private sector growth.
Top USD data releases:
Jun 22 USD Manufacturing PMI (Jun)
Jun 22 USD Services PMI (Jun)
GBP – Pound Rallies on Mixed BoE Forward Guidance
A clear GBP selling bias emerged at the start of this week, with the Pound plunging in response to lacklustre macroeconomic data as well as renewed Brexit jitters. Sterling then rallied through the second half of the week, aided by the Bank of England’s (BoE) latest rate hike and hints that future increases could be more aggressive.
In the spotlight next week will be the UK’s consumer price index. Will another jump in inflation unsettle GBP investors and push the Pound lower?
Top GBP data releases:
Jun 22 GBP Inflation Rate (May)
Jun 22 GBP Services PMI (Jun)
Jun 22 GBP Retail Sales (May)
AUD – Australian Dollar Fluctuates in Mixed Trade
The Australian Dollar tumbled through the first half of this week as the risk-sensitive currency loss out amid the market’s flight to safety. The ‘Aussie’ then bounced back in the latter half of the session amid a strong uptick in Australian employment growth and an improving market mood.
The minutes from the Reserve Bank of Australia’s (RBA) latest policy meeting may act as the main catalyst of movement in the ‘Aussie’ next week, with a broadly hawkish tone potentially reflecting positively on AUD exchange rates.
Top AUD data releases:
Jun 21 AUD RBA Minutes
Jun 23 AUD Services PMI (Jun)
Jun 24 AUD RBA Lowe Speech
ZAR – Rand Rocked by Fluctuating Risk Sentiment
The South African Rand traded in a wide range over the past week amid fluctuating risk appetite. This saw the Rand initially stumble before briefly spiking in the wake of the Fed’s latest interest rate decision.
The release of South Africa’s latest inflation figures will likely be the primary focus for ZAR investors next week, with a bump in inflation potentially buoying the Rand.
Top ZAR data releases:
Jun 22 ZAR Inflation Rate (May)
CAD – Canadian Dollar Slumps amid Oil Price Slump
The Canadian Dollar fell back this week as a sharp slump in oil prices took its toll on the commodity-linked ‘Loonie’.
Turning to next week, will another bump in Canadian inflation boost CAD exchange rates on hopes it will push the Bank of Canada (BoC) to pursue more aggressive interest rate hikes?
Top CAD data releases:
Jun 21 CAD Retail Sales (Apr)
Jun 22 CAD Inflation Rate (May)