US Dollar Rallies as Coronavirus Concerns Spooks Markets, Euro Undermined by Slowing Inflation

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 Weakens as Inflation Slows

The Euro was placed on the defensive this week, with a slowing of Eurozone inflation in June appearing to be the main contributing factor behind the single currency’s weakness. While the slowdown was only modest in scope, it was still seen as relieving any pressure on the European Central Bank (ECB) to start raising interest rates.  

Looking ahead, the Euro could face additional pressure next week as the latest ZEW survey is expected to report that German economic sentiment deteriorated again in July.

Top EUR data releases:

Jul 05 EUR Services PMI (Jun)

Jul 06 EUR Retail Sales (May)

Jul 06 EUR ZEW Economic Sentiment (Jul)

 

USD – US Dollar Rallies amidst Renewed Coronavirus Concerns

The US Dollar opened this week on strong footing, as demand for the safe-haven currency was boosted as investors were spooked by a growing number of new coronavirus outbreaks across the world. However the US Dollar relinquished some of these gains in the latter half of the week, after a weaker-than-expected manufacturing PMI triggered some profit taking by USD investors.

Turning to next week’s session, the US Dollar could receive a boost if the US service sector reports another month of record growth in June.

Top USD data releases:

Jul 06 USD ISM Non-Manufacturing PMI (Jun)

Jul 07 USD JOLTs Job Openings (May)

Jul 07 USD FOMC Minutes

 

GBP – Pound Fluctuates amid Mixed Coronavirus and Brexit Headlines

The Pound traded in a wide range this week, as some positive Brexit developments were countered by ongoing coronavirus concerns. Infusing further volatility into Sterling were also some dovish comments from Bank of England Governor Andrew Bailey, in which he suggested the recent rise in inflation will be temporary.

The publication of the UK’s latest monthly GDP figures will be in focus next week, with the Pound likely to firm if the economy continued to growth at a robust pace in June.

Top GBP data releases:

Jul 05 GBP Services PMI (Jun)

Jul 09 GBP GDP (May)

 

AUD – Australian Dollar Undermined by Risk-Off Mood

The Australian Dollar trended lower through this week’s session as skittish investors shied away from the risk-sensitive ‘Aussie’. Further undermining AUD exchange rates were concerns over the spread of the Delta variant of the coronavirus throughout Australia.

Looking ahead, the Reserve Bank of Australia (RBA) will hold its latest policy meeting next week, with the Australian Dollar potentially facing additional headwinds if the RBA’s forward guidance disappoints. 

Top AUD data releases:

Jul 06 AUD RBA Interest Rate Decision 

 

ZAR – South African Rand Dented by Coronavirus Concerns

The South African Rand faced some notable selling pressure this week, as South Africa was gripped by a third wave of coronavirus infections, which raised concerns over the potential strain on the country’s health service. However the Rand was able to recoup some of these losses on Wednesday after South African recorded a larger-than-expected trade surplus in May.

Coming up next week we may see the Rand remain under pressure if domestic coronavirus cases continue to climb at an alarming pace.

 

CAD – Canadian Dollar Rallies as WTI Crude Prices Jump

After a weak start to the session, the Canadian Dollar was able to mount a convincing comeback in the middle of this week, as WTI crude prices surged to their highest levels since October 2018. Further boosting the appeal of the ‘Loonie’ was also the release of Canada’s latest GDP figures, which printed above expectations in April.

The ‘Loonie’ will seek to carry this momentum through to next week’s session, should Canada’s latest unemployment figures print positively.  

Top CAD data releases:

Jul 09 CAD Unemployment Rate (Jun)