US Dollar Soars on Bumper Inflation Print, Euro Undermined by Cautious ECB Comments

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 Dented by ECB’s Cautious Messaging

The Euro stumbled at the start of this week, after European Central Bank (ECB) President Christine Lagarde sought to temper expectations for the ECB’s next interest rate hike. EUR exchange rates were further pressured by the European Commission’s cut to its EU growth forecast for 2022.

Looking ahead to next week, the release of Germany’s ZEW economic sentiment index will be in the spotlight. Will a more upbeat outlook this month help bolster the Euro?

Top EUR data releases:

Feb 15 EUR GDP (Q4)

Feb 15 EUR ZEW Economic Sentiment (Feb)

Feb 18 EUR Consumer Confidence (Feb)

 

USD – US Dollar Rallies on Surging Inflation

The US Dollar struggled to attract support in the first half of the week, with USD exchange rates suppressed by falling US Treasury yields and a risk-on mood. However, the ‘Greenback’ was able to bounce back in the latter half of the week as a hotter-than-expected US inflation print bolstered expectations for a half-percentage rate hike from the Federal Reserve next month.

Coming up next week, the publication of the minutes from the Fed’s January policy meeting will be picked over with a fine-tooth comb for any hints for more hints on the US central bank’s monetary policy plans.

Top USD data releases:

Feb 16 USD Retail Sales (Jan)

Feb 16 USD Industrial Production (Jan)

Feb 16 USD FOMC Minutes

 

GBP – Pound Fluctuates on Political Jitters

Trade in the Pound was mixed this week. Political jitters continued to infuse volatility in GBP exchange rates as pressure on Boris Johnson to resign as Prime Minister continued to grow. Elsewhere the Pound was impacted by comments from Bank of England Chief Economist Huw Pill, who warned the bank’s outlook on interest rates is uncertain beyond the next few months.

Another uptick in UK inflation could help to bolster the Pound next week on the assumption it will place more pressure on the BoE to hike rates. However GBP investors will also be keeping an eye out for the latest wage growth release, amidst concerns over the UK’s cost-of-living crisis.

Top GBP data releases:

Feb 15 GBP Unemployment Rate (Dec)

Feb 15 GBP Wage Growth (Dec)

Feb 16 GBP Inflation Rate (Jan)

 

 

AUD – Australian Dollar Flip-Flops in Mixed Trade

The Australian Dollar trended broadly higher in the first half of this week, with the risk-sensitive currency benefitting from a prevailing risk-on mood and some upbeat AUD data releases. However, the ‘Aussie’ was unable to sustain these gains in the latter half of the week as market sentiment soured in the wake of the latest US inflation figures.

Looking ahead, the publication of Australia’s jobs report will be the main focus for AUD investors next week. Expect the Australian Dollar to firm if unemployment continue to drop at the start of 2021.

Top AUD data releases:

Feb 15 AUD RBA Minutes

Feb 17 AUD Inflation Rate (Jan)

 

ZAR – Rand Firms on Pro-Business SONA

The South African Rand firmed this week, with the emerging market currency able to resist some of the post US-CPI pressure thanks to President Cyril Ramaphosa’s State of the Nation Address (SONA), in which was interpreted as pro-business.

Looking ahead to next week, the focus for ZAR investors looks to be on South Africa’s latest CPI figures. Will another uptick in inflation buoy the Rand?

Top ZAR data releases:

Feb 16 ZAR Inflation Rate (Jan)

Feb 16 ZAR Retail Sales (Dec)

 

CAD – Canadian Dollar Underpinned by Strong Oil Prices

The Canadian Dollar was able to hold its ground against the majority of its peers this week, with the commodity linked currency firming in response to robust oil prices after WTI crude struck its highest levels since 2014.

The publication of Canada’s consumer price index is likely to be the main focus for CAD investors next week, with the ‘Loonie’ potentially strengthening if domestic inflation accelerated in January.

Top CAD data releases:

Feb 16 CAD Inflation Rate (Jan)

Feb 18 CAD Retail Sales (Dec)