US Dollar Storms Higher as Treasury Yields Jump, Euro Plunges amid Ongoing Vaccine Plight
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 Slides on EU Vaccine Woes
The Euro faced sustained losses over the past week, with the currency even falling below $1.20 against the US Dollar as the single currency was hounded by concerns over the EU’s slow vaccination rollout. While both the Eurozone’s latest GDP and inflation releases printed above expectations, this failed to provide a boost for EUR.
Looking ahead to next week, the Euro may continue to face an uphill battle as the EU’s vaccination struggle is likely to stoke concerns over the Eurozone’s potential for an economic recovery this year.
Top EUR data releases:
Feb 8 EUR German Industrial Production (Dec)
Feb 9 EUR German Trade Balance (Dec)
Feb 12 EUR Industrial Production (Dec)
USD – US Dollar Surges in Step with Treasury Yields
The US Dollar has enjoyed significant support this week as the currency was supported by a jump in US Treasury yields. The rise in yields was triggered by optimism over Biden’s next coronavirus stimulus package as well as some upbeat PMI and employment figures.
Turning to next week, the focus for USD investors will be on the latest US consumer price index, where the continued acceleration in inflation could help to extend the US Dollar’s gains.
Top USD data releases:
Feb 10 USD Inflation Rate (Jan)
Feb 11 USD Initial Jobless Claims (6/Feb)
Feb 12 USD Michigan Consumer Sentiment (Feb)
GBP – Pound Rallies as BoE Dismisses Negative Interest Rates
Ongoing optimism over the UK’s vaccine rollout saw the Pound receive support through the first half of this week’s session. However, the majority of Sterling’s gains were focused in the latter half of the week, after the Bank of England (BoE) signalled that negative interest rates are not on the table during the current cycle of monetary easing.
Coming up next week, the publication of the UK’s latest GDP figures will be in the spotlight for GBP investors, with confirmation of a contraction of growth in the last quarter of 2020 likely to send the Pound lower.
Top GBP data releases:
Feb 12 GBP GDP (Q4)
Feb 12 GBP Business Investment (Q4)
Feb 12 GBP Trade Balance (Dec)
AUD – Australian Dollar Fluctuates Following Dovish RBA
The Australian Dollar traded in a wide range over the past week, with the ‘Aussie’ initially retreating after a dovish surprise from the Reserve Bank of Australia (RBA) as it opted to expand its quantitative easing programme this month. AUD exchange rates were then able to recoup most of its losses through the second half of the week, aided by an unexpected rise in Australia’s latest trade surplus.
Looking ahead, the publication of Australia’s latest business and consumer confidence figures will be in focus next week, with the ‘Aussie’ potentially firming if sentiment continues to improve.
Top AUD data releases:
Feb 9 AUD Business Confidence (Jan)
Feb 10 AUD Consumer Confidence (Feb)
ZAR – Rand Strengthens as Restrictions eased
The South African Rand has made steady gains this week, with the currency finding support as South Africa began to ease some of its coronavirus restrictions on hopes that the reopening of some businesses and pent up demand will help give the country an economic boost.
President Cyril Ramaphosa’s State of the Nation Address will be top of the agenda for ZAR investors as they look to his policy announcements to provide a path out of the pandemic and toward economic recovery.
Top ZAR data releases:
Feb 11 ZAR Manufacturing Production (Dec)
Feb 11 ZAR State of the Nation Address
CAD – Canadian Dollar Firms as Oil Prices Surge
The Canadian Dollar struck higher against most of its peers this week, as the appeal of the commodity-linked ‘Loonie’ was underpinned by a strong uptick in oil prices, which propelled WTI crude over $56 a barrel for the first time in over a year.
In the absence of any notable Canadian data releases next week, it’s likely CAD exchange rates will remain highly sensitive to oil prices, potentially extending its gains if the commodity market continues to rally.