US Dollar Plunges on Faded Fed Rate Hikes Bets, Pound Bolstered by Economic Optimism

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 Wavers in Mixed Trade

The Euro wobbled in the first half of this week as concerns over a looming Eurozone recession were countered by a surprisingly strong improvement in consumer morale. The single currency then continued to fluctuate through the latter half of the week as hawkish European Central Bank (ECB) comments were countered by dovish minutes from the bank’s October meeting.

The primary focus for EUR investors next week is likely to be the Eurozone’s consumer price index. Will another bump in inflation boost ECB rate hike bets and lift the Euro?

Top EUR data releases:

Nov 29 EUR Economic Sentiment (Nov)

Nov 29 EUR German Inflation Rate (Nov)

Nov 30 EUR Inflation Rate (Nov)

 

 

USD – US Dollar Slides on Dovish FOMC Minutes

The US Dollar continued to march lower this week as the minutes from the Federal Reserve’s November meeting revealed a ‘substantial majority’ of policymakers wish to slow the pace of the bank’s interest rate hikes. Adding to the pressure on USD exchange rates was a prevailing risk-on mood in additional to a worrying plunge in the latest US PMI releases.

Centre stage for USD investors next week will be the latest US payroll release. If the number of jobs added by the US economy falls more than expected in November it is likely to bolster expectations for a more modest Fed rate hike next month.

Top USD data releases:

Dec 1 USD Core PCE Price Index (Oct)

Dec 1 USD ISM Manufacturing PMI (Nov)

Dec 2 USD Non-Farm Payrolls (Nov)

 

GBP – Pound Surges on Economic Optimism

The Pound enjoyed strong support this week, the currency benefitting from a more positive outlook for the UK economy. Reinforcing Sterling’s gains was some hawkish commentary from Bank of England (BoE) policymakers as well as another setback for the Scottish government’s pursuit of a second independence referendum.

In the absence of any high-impact UK data releases next week, the direction of the Pound is likely to be linked to domestic headlines. Any further sign that businesses are struggling could place Sterling on the back foot.

Top GBP data releases:

Nov 29 GBP Consumer Credit (Oct)

Dec 1 GBP Manufacturing PMI (Nov)

 

 

AUD – Australian Dollar Strengthens in Bullish Trade

The Australian Dollar strengthened this week, with a large portion of the risk sensitive currency’s gains stemming from a pullback in the US Dollar and the prospect of slower Fed rate hikes. However the ‘Aussie’s gains were still kept in check amid concerns over a sharp rise in Covid cases in China.

The release of Australia’s latest retail sales could act as a major headwind for the ‘Aussie’ as the start of next week as economists forecast sales growth will have contracted sharply in October.

Top AUD data releases:

Nov 28 AUD Retail Sales (Oct)

Nov 30 AUD Business Confidence (Nov)

Dec 2 AUD RBA Lowe Speech

 

ZAR – Rand Rally Capped by SARB Rate Hike

The South African Rand trended broadly higher this week, the emerging marker currency initially rising on the back of a weaker US Dollar, in addition to stronger-than-expected domestic inflation figures. However, these gains were tempered in the wake of the South African Reserve Bank’s (SARB) latest interest rate decision amid concerns that another 75bps rate hike will place more pressure on the country’s economy.

The only ZAR data of note next week will be South Africa’s latest trade figures. Will a widening of the nation’s trade surplus help to extend the Rand’s gains?

Top ZAR data releases:

Nov 30 ZAR Balance of Trade (Oct)

 

CAD – Canadian Dollar Undermined by Plummeting Oil Prices

The Canadian Dollar found itself on the defensive through the majority of this week’s session, as a sharp drop in oil prices reflected poorly on the commodity-linked currency.

In the spotlight for CAD investors next week will be Canada’s latest GDP figures, could another quarter of robust growth in Q3 help to buoy the ‘Loonie’?

Top CAD data releases:

Nov 29 CAD GDP (Q3)

Nov 29 CAD GDP (Sep)

Dec 2 CAD Unemployment Rate (Nov)