US Dollar Soars as Risk Appetite Slumps, Pound Rocked by Coronavirus Developments
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 Rebounds from Three-Month Low as ECB Alters Inflation Mandate
The Euro spent a large portion of this week’s session on the defensive, with the single currency being undermined by some lacklustre economic releases from Germany. However, the Euro was able to mount a convincing recovery in the latter half of the week, after the European Central Bank (ECB) altered its inflation target, in a move which has helped to bolster the bank’s credibility.
Turning to next week’s session, will June’s finalised CPI figures, put some pressure on EUR exchange rates after confirming Eurozone inflation slowed to 1.9%?
Top EUR data releases:
Jul 13 EUR German Inflation Rate (Jun)
Jul 14 EUR Industrial Production (May)
Jul 16 EUR Inflation Rate (Jul)
USD – US Dollar Rallies as Safe-Haven Demand Soars
The US Dollar enjoyed considerable support over the past week, with investors favouring the safe-haven currency amid a prevailing risk-off mood. The ‘Greenback’ faced a small setback as the latest Federal Open Market Committee (FOMC) minutes were more dovish than expected, but this ultimately did little to discourage USD investors.
In the spotlight next week will be the US consumer price index, with economists predicting another surge in US inflation last month. Will this put more pressure on the Federal Reserve to tighten its monetary policy and boost the US Dollar as a result?
Top USD data releases:
Jul 13 USD Inflation Rate (Jun)
Jul 15 USD Initial Jobless Claims (10/Jul)
Jul 16 USD Retail Sales (Jun)
GBP – Pound Fluctuates amid Mixed Coronavirus Developments
Boris Johnson’s announcement that almost all coronavirus restrictions in England would be lifted on 19 July, helped to propel the Pound higher at the start of this week. However, these gains faded towards the end of the session as surging coronavirus cases and rising hospitalisations began to cast doubts over the government’s reopening plans.
Looking ahead, some high-impact UK data releases could offer direction to the Pound next week, with positive inflation and unemployment figures potentially bolstering Sterling sentiment.
Top GBP data releases:
Jul 14 GBP Inflation Rate (Jun)
Jul 15 GBP Unemployment Rate (May)
Jul 15 GBP Wage Growth (May)
AUD – Australian Dollar Slumps as Risk Appetite Softens
The Australian Dollar initially strengthened through the first half of this week, rise in response to the Reserve Bank of Australia’s (RBA) announcement it would begin tapering bond buying programme from September. But, the ‘Aussie’ was unable to sustain these gains for long, as souring market sentiment sapped demand for the risk-sensitive currency, sending it to a new 2021 low against the US Dollar.
Turning to next week’s session, the primary focus for AUD investors will be on Australia’s latest jobs report, with the ‘Aussie’ likely to face some headwinds if unemployment started to rise again last month as lockdown measures were reintroduced.
Top AUD data releases:
Jul 13 AUD Business Confidence (Jun)
Jul 14 AUD Consumer Confidence (Jul)
Jul 15 AUD Unemployment Rate (Jun)
ZAR – South African Rand Undermined by Risk-Off Mood
The South African Rand trended lower against the majority of its peers this week as a prevailing risk-off mood saw most investors shy away from the emerging market currency. However, strong global demand and elevated commodity prices were able to extend some support to the Rand, tempering its losses.
The publication of South Africa’s latest retail sales report could keep pressure on ZAR exchange rates next week, if sales growth continued to contract in May.
Top ZAR data releases:
Jul 14 ZAR Retail Sales (May)
CAD – Canadian Dollar Plunges as Oil Prices Collapse
The Canadian Dollar opened this week’s session on strong footing, with the commodity-linked ‘Loonie’ firming as WTI crude prices rose to a three-year high. CAD exchange rates subsequently plunged however, with the currency falling in tandem with a dramatic slump in oil prices due to a row within OPEC.
The Bank of Canada’s (BoC) latest rate decision will no doubt be the focus for CAD investors next week. Will a hawkish outlook from the bank help the Canadian Dollar to mount a recovery?
Top CAD data releases:
Jul 14 CAD BoC Interest Rate Decision
Jul 15 CAD ADP Employment Change (Jun)