US Dollar Rallies as US Inflation Skyrockets, Pound Undermined by GDP Slowdown

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 Fluctuates in Mixed Trade

Trade in the Euro was mixed this week. The single currency initially finding some support after German economic sentiment unexpectedly improved in November. However, EUR exchange rates then wavered amidst a sharp uptick in the US Dollar as well as the announcement that Germany had cut its growth forecast for 2021.

The latest Eurozone GDP release will be in the spotlight for EUR investors next week. Could the second estimate see Q3 growth revised higher and bolster the Euro?

Top EUR data releases:

Nov 16 EUR GDP (Q3)

Nov 17 EUR Inflation Rate (Oct)

 

USD – US Dollar Firms Following Surge in US Inflation

The US Dollar initially got off to a slow start this week, with the appeal of the safe-haven currency being dented by a prevailing risk-on mood. However, a subsequently souring of market sentiment, coupled with data showing that US inflation rocketed up for a 30-year high of 6.2% in October, allowed the ‘Greenback’ to surge higher in the latter half of the session.

Looking ahead, it’s set to be a busy session for USD investors next week, with the latest Federal Reserve policy meeting and US payroll print both set to influence the US Dollar.

Top USD data releases:

Nov 16 USD Retail Sales (Oct)

Nov 16 USD Industrial Production (Oct)

Nov 18 Initial Jobless Claims (13/Nov)

 

GBP – Pound Stumbles on Weak GDP Print

The Pound initially firmed this week, as the currency’s slump in the previous week made it more attractive to price-conscious investors. However, Sterling was unable to sustain these gains for long, with Brexit jitters and a weaker-than-expected third quarter GDP reading dragging on GBP exchange rates in the second half of the session.

Looking ahead, it’s likely to be a busy session for GBP investors next week, with the UK’s latest inflation and employment data potentially resulting in some notable movement in the Pound, given their potential to influence the Bank of England’s (BoE) next policy decision.

Top GBP data releases:

Nov 16 GBP Unemployment Rate (Sep)

Nov 17 GBP Inflation Rate (Oct)

Nov 19 GBP Retail Sales (Oct)

 

AUD – Australian Dollar Undermined by Surge in Unemployment

The Australian Dollar retreated this week, coming under some notable pressure in the wake of domestic unemployment figures as they reported the jobless rate soared to 5.2% in October. These losses were compounded by a prevailing risk-off mood, which further sapped the appeal of the ‘Aussie’.

Turning to next week’s session, the publication of the minutes from the Reserve Bank of Australia’s (RBA) November policy meeting are likely to be the main priority for AUD investors, with the Australian Dollar likely to fall if they reaffirm the bank’s cautious outlook.

Top AUD data releases:

Nov 16 AUD RBA Minutes

Nov 16 AUD RBA Lowe Speech

Nov 17 AUD Wage Price Index (Q3)

 

ZAR – Rand Dented by Eskom Concerns

The South African Rand face some notable selling pressure in the first half of this week after state utility Eskom warned that the risk of power outages is likely to continue until more capacity can be added to the grid, a process which could take years. However, the Rand was able to bounce back in the second half of the week, following a positive response to finance minister Enoch Godongwana’s mid-term budget policy statement.

The focus for ZAR investors next week will be on the South African Reserve Bank’s (SARB) latest interest rate decision, with the Rand potentially rising if the SARB hikes rates as forecast.

Top ZAR data releases:

Nov 17 ZAR Inflation Rate (Oct)

Nov 17 ZAR Retail Sales (Sep)

Nov 18 ZAR SARB Interest Rate Decision

 

CAD – Canadian Dollar Fluctuates amidst Oil Price Swings

The Canadian Dollar traded in a wide range over the past week, with the commodity-linked currency being infused by some volatility as a result of large fluctuations in oil prices.

The publication of Canada’s consumer price index will be in focus next week. Will another acceleration of domestic inflation bolster both Bank of Canada (BoC) rate hike expectations and the ‘Loonie’?

Top CAD data releases:

Nov 17 CAD Inflation Rate (Oct)

Nov 18 CAD ADP Employment Change (Oct)

Nov 19 CAD Retail Sales (Sep)