US Dollar Weakens amid Biden Bounce, Pound Rallies on Vaccination Optimism
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 Undermined by Italian Political Woes, ECB FX Concerns
The Euro struggled through the first half of this week, as political uncertainty in Italy took its toll on the single currency. The European Central Bank (ECB) then placed additional pressure on EUR exchange rates after President Christine Lagarde blamed the Eurozone’s weak inflation on the strength of the Euro.
Looking ahead to next week, the focus for EUR investors will be on a slew of German economic releases, most notably Germany’s latest GDP release, which is expected to report a contraction of growth in the fourth quarter.
Top EUR data releases:
Jan 25 EUR German Business Confidence (Jan)
Jan 28 EUR German Inflation Rate (Jan)
Jan 29 EUR German GDP (Q4)
USD – US Dollar Weakens as Biden Bounce Cheers Markets
The US Dollar fell back this week as demand for the safe-haven currency was undermined by a prevailing risk-on tone. This came on hopes newly-elected US President Joe Biden will push through a major stimulus package and implement measures to help tackle soaring US coronavirus statistics.
Coming up next week, the focus for USD investors will be split between the Federal Reserve’s first policy meeting of 2021 as well as the latest US GDP figures, where a positive reading could help to cheer markets.
Top USD data releases:
Jan 27 USD Durable Goods Orders (Dec)
Jan 27 USD Fed Rate Decision
Jan 28 USD GDP (Q4)
GBP – Pound Firms on Economic Optimism
The Pound continued to trend higher over the past week amidst growing hopes for a strong rebound in the UK economy in 2021. This was underpinned by the UK’s aggressive coronavirus vaccination programme, the acceleration of which buoyed hopes that the economy could reopen sooner rather than later.
However, Sterling could face some headwinds at the start of next week as the UK’s latest job figures may report a rise in domestic unemployment.
Top GBP data releases:
Jan 26 GBP Unemployment Rate (Nov)
Jan 26 GBP Wage Growth (Nov)
Jan 26 GBP CBI Distributive Trades (Jan)
AUD – Australian Dollar Bolstered by Risk-On Trade
The Australian Dollar firmed this week, as the prevailing risk-on tone bolstered the appeal of the high-yield ‘Aussie’. Further bolstering AUD exchange rates was the publication of Australia’s latest jobs report, with AUD investors hailing a larger-than-expected drop in the jobless rate as a sign that unemployment may have peaked.
Turning to next week, the publication of Australia’s latest CPI figures are likely to be the main focus for AUD investors, with a strengthening of inflation in the fourth quarter potentially offering support to the ‘Aussie’.
Top AUD data releases:
Jan 27 AUD Business Confidence (Dec)
Jan 27 AUD Inflation Rate (Q4)
ZAR – Rand Rallies in Upbeat Trade
The South African Rand enjoyed some notable support this week, with the emerging market currency able to ride the wave of market optimism higher. The Rand then maintained its upward trajectory after the South African Reserve Bank (SARB) opted to leave its monetary policy untouched this month.
Looking ahead, in the absence of any notable ZAR data releases, the direction of the Rand looks to continue to be driven by market sentiment, potentially extending the Rand’s upward momentum if the mood remains broadly positive.
CAD – Canadian Dollar Firms on BoC Optimism
The Canadian Dollar struck higher this week, firming in the wake of the Bank of Canada’s (BoC) latest policy meeting after the bank struck a hawkish tone in its outlook. The ‘Loonie’ received further support from robust oil prices as the WTI crude index held around $53 a barrel.
Coming up next week, the release of Canada’s latest monthly GDP figures will likely be in the spotlight for CAD investors, with another expansion of growth likely to reflect well on the Canadian Dollar.
Top CAD data releases:
Jan 29 CAD GDP (Nov)