US Dollar Plunges, Euro Undermined by GDP Figures
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 Rally Cut Short Following GDP Contraction
The Euro started poorly this week after Germany’s latest business confidence index printed below expectations. The single currency then rebounded midweek on the back of a broad USD selloff, before stumbling at the end of the week again as the Eurozone’s latest GDP figures confirmed the bloc slipped into a double-dip recession over the winter.
Looking ahead, the Euro could face headwinds through next week’s session, amid speculation the Eurozone’s latest retail sales figures will report a sharp slowing of growth.
Top EUR data releases:
May 5 EUR Eurozone Services PMI (Apr)
May 6 EUR German Factory Orders (Mar)
May 6 EUR Retail Sales (Mar)
USD – US Dollar Punished by Dovish Fed
The US Dollar experienced aggressive selling this week after the Federal Reserve struck a notable dovish tone in its latest forward guidance, signalling to investors that its next rate hike is some way off. This also overshadowed the release of the latest US GDP figures, which failed to offer clear direction to the ‘Greenback’ in the latter half of the week in spite of printing above expectations.
Turning to next week, the publication of the latest US payroll figures will be closely watched by USD investors, with the US Dollar likely to soar if the US economy witnessed another bumper increase in new jobs in April.
Top USD data releases:
May 3 USD Manufacturing PMI (Apr)
May 5 USD Non-Manufacturing PMI (Apr)
May 7 USD Non-Farm Payrolls (Apr)
GBP – Pound Fluctuates amid UK Political Uncertainty
The Pound traded in a wide range this week as upbeat retail data was offset by some political uncertainty in the UK. This followed the news that a formal investigation has been launched into how Boris Johnson funded the renovations of his Downing Street flat, with the scandal potentially hurting the Conservatives in next week’s local and Scottish elections.
In the spotlight for GBP investors next week will be the Bank of England’s (BoE) latest rate decision. No policy changes are expected but the Pound could strengthen if the BoE strikes a hawkish tone in its outlook for rest of the year.
Top GBP data releases:
May 6 GBP Services PMI
May 6 GBP BoE Rate Decision
May 6 GBP Scottish Parliamentary Election
AUD – Australian Dollar Slips from Highs as Inflation Disappoints
The Australian Dollar enjoyed a strong start this week, with the currency gaining on rising commodity prices and improving market sentiment. However the ‘Aussie’ relinquished a significant portion of these gains as sentiment soured and Australia’s latest inflation figures printed below expectations.
AUD investors will be focused on the Reserve Bank of Australia (RBA) next week as it concludes its latest policy meeting, with the Australian Dollar poised to strengthen if the RBA strikes an upbeat tone in its forward guidance.
Top AUD data releases:
May 4 AUD Trade Balance (Mar)
May 6 AUD RBA Rate Decision
ZAR – Rand Fluctuates in Thin Trade
The South African Rand weakened through the first half of this week’s session, as a national holiday resulted in thin trade in the emerging market currency. However, the Rand then mounted a convincing recovery through the latter half of the week, as a broad slump in the US Dollar bolstered market risk appetite.
Looking ahead to next week’s session, the Rand could find some support if South Africa’s latest manufacturing PMI revealed factory activity continued to expand through April.
Top ZAR data releases:
May 4 ZAR Manufacturing PMI (Apr)
May 7 ZAR Business Confidence (Apr)
CAD – Canadian Dollar Rallies on Upbeat Data and Rising Oil Prices
The Canadian Dollar made steady gains this week, initially rising after data showed that the rate of daily vaccinations being administered in Canada has doubled since the start of April. These gains were then reinforced by a stronger-than-expected Canadian retail sales release and a strong rise in oil prices.
Meanwhile, the main catalyst of movement in CAD exchange rates next week is likely to be Canada’s latest jobs report, with another fall in the unemployment rate in April potentially bolstering the ‘Loonie’.
Top CAD data releases:
May 4 CAD Trade Balance (Mar)
May 7 CAD Unemployment Rate (Apr)
May 7 CAD Ivey PMI (Apr)