US Dollar Stumbles as US Inflation Cools, Euro Bolstered by USD Weakness.

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 Firms on USD Weakness

The Euro trended broadly higher over the past week. While a key part of the single currency’s strength came from its negative correlation with the US Dollar, it also benefited from some hawkish remarks from European Central Bank (ECB) policymakers.

The Eurozone’s latest PMI releases will be the primary focus for EUR investors next week. Could another expansion in the private sector help to bolster the Euro?

Top EUR data releases:

Apr 18 EUR German ZEW Economic Sentiment (Apr)

Apr 21 EUR Manufacturing PMI (Apr)

Apr 21 EUR Services PMI (Apr)

 

USD – US Dollar Slumps on Inflation Miss

After fluctuating at the start of the week amid a mixed market mood, the US Dollar came under notable pressure in mid-week trade as softer-than-expected US inflation and dovish FOMC minutes undermined Federal Reserve rate hike bets. A subsequent souring of market sentiment following the release of the latest US retail sales then helped the ‘Greenback’ to claw back some of these losses at the end of the session.

While not as influential as the ISM releases, the latest US S&P PMIs could drive movement in the US Dollar next week amid the absence of other data. Will a slowing of private sector growth pull USD lower?

Top USD data releases:

Apr 21 USD Manufacturing PMI (Apr)

Apr 21 USD Services PMI (Apr)

 

GBP – Pound Wavers as GDP Stagnates

The Pound struggled to find direction through the first half of this week as the International Monetary Fund (IMF) upgraded its 2023 forecast for the UK but warned it still expects growth to contract this year. Sterling then stumbled in the latter half of the week after the UK’s latest GDP figures revealed economic growth stalled in February.

GBP investors will be keeping a close eye on the UK’s latest wage growth and inflation figures next week and how they may impact the odds of a Bank of England (BoE) rate hike in May.

Top GBP data releases:

Apr 18 GBP Wage Growth (Feb)

Apr 19 GBP Inflation Rate (Mar)

Apr 21 GBP Services PMI (Apr)

 

AUD – Australian Dollar Rallies on Impressive Employment Figures

The Australian Dollar struggled in the first half of the week as it was undermined by dovish comments from Reserve Bank of Australia (RBA) Deputy Governor Michele Bullock. The ‘Aussie’ then rebounded later in the session, supported by USD weakness as well as a stronger-than-expected jobs report.

The minutes from the RBA’s latest meeting could pile pressure on AUD exchange rates next week, if they underpin suggestions that the bank’s hiking cycle is over.

Top AUD data releases:

Apr 18 AUD RBA Meeting Minutes

Apr 21 AUD Manufacturing PMI (Apr)

Apr 21 AUD Services PMI (Apr)

 

ZAR – Rand Knocked by Load Shedding

The South African Rand came under pressure this week as ZAR investors were dismayed by Eskom’s implementation of new load shedding measures. But it wasn’t all doom and gloom for the Rand as easing Fed rate hike bets offered some support to the emerging market currency.

Next week will likely see movement in the Rand driven by South Africa’s latest inflation release. Could another elevated reading bolster bets for additional rate hikes from the South African Reserve Bank (SARB)?

Top ZAR data releases:

Apr 19 ZAR Inflation Rate (Mar)

Apr 19 ZAR Retail Sales (Feb)

 

CAD – Canadian Dollar Slumps as BoC Keeps Rates on Hold

The Canadian Dollar faced a notable setback this week after the Bank of Canada (BoC) struck a dovish tone as it left interest rates on hold again following its latest policy meeting. However, helping to limit the ‘Loonie’s losses was an uptick in oil prices.

Looking ahead, Canada’s latest CPI release could pull CAD exchange rates even lower as another pullback in inflation further undermines BoC rate hike expectations.

Top CAD data releases:

Apr 18 CAD Inflation Rate (Mar)

Apr 19 CAD PPI (Mar)

Apr 21 CAD Retail Sales (Feb)