US Election Drama Stokes Currency Volatility
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 Rallies in spite of Europe’s Coronavirus Woes
Despite some concerns over Europe’s coronavirus situation weakening the single currency at the start of the week, the Euro was able to mount a convincing rally this week, bolstered by some weakness in its main rival the US Dollar as well as data showing the Eurozone narrowly avoided contraction in October.
In focus for EUR investors next week will be the latest ZEW economic surveys, with EUR investors bracing for a sharp plunge in economic sentiment this month in response to new lockdown measures across the Eurozone.
Top EUR data releases:
Nov 10 EUR ZEW Economic Sentiment Index (Nov)
Nov 12 EUR Industrial Production (Sep)
Nov 13 EUR GDP (Q3)
USD – US Dollar Rocked by US Election Drama
The US Dollar has experienced notable volatility this week as a knife-edge US presidential election dominated trade. Predictions of an overwhelming victory for Biden saw the US Dollar initially tumble before a tighter-than-expected race and Trump’s threats to contest a result which looked to narrowly favour Biden prompted a USD rally.
Looking ahead, the possibility of legal challenges to the final election result could see investors favour the US Dollar next week, especially if coronavirus developments also start to weigh on market sentiment.
Top USD data releases:
Nov 10 USD JOLTs Job Openings (Sep)
Nov 12 USD Inflation Rate (Oct)
Nov 12 USD Initial Jobless Claims (07/Nov)
GBP – Pound Fluctuates on Lockdown Fears
The Pound traded in a wide range over the past week, initially rising on some Brexit optimism before getting caught up in the wider market sell-off on Wednesday as the UK prepared to go into a second lockdown. However, Sterling was offered a lifeline in the second half of the week, with GBP investors welcoming a larger-than-expected QE expansion from the Bank of England (BoE).
Coming up next week is the publication of the UK’s third quarter GDP figures. While these are expected to show a sharp rebound in economic growth over the summer, any upside in Sterling is likely to prove limited given the UK is facing down another contraction in Q4.
Top GBP data releases:
Nov 10 GBP Unemployment Rate (Sep)
Nov 10 GBP Wage Growth (Sep)
Nov 12 GBP GDP (Q3)
AUD – Australian Dollar Jumps despite Jittery Trade
The Australian Dollar has rallied this week, capitalising on the initial bump in market sentiment to climb to a two-week high in spite of some setbacks due to jittery mid-week trade. Not even the Reserve Bank of Australia’s (RBA) decision to slash interest rates to a new record low was able to dampen the ‘Aussie’s gains.
Looking ahead, the focus for AUD investors will be on Australia’s latest consumer and business confidence figures. Will falling domestic coronavirus cases have resulted in a more upbeat outlook?
Top AUD data releases:
Nov 10 AUD Business Confidence (Oct)
Nov 10 AUD Consumer Confidence (Nov)
ZAR – Rand Strengthens on Improving Market Sentiment
The South African Rand is trending higher this week as it was caught up in a broader rebound in emerging market currencies connected to the US election. This uptick in the Rand was further supported by South Africa’s latest PMI figures as the country’s manufacturing sector reported a record jump in activity.
Turning to next week, the focus will be on South Africa’s repeatedly delayed Q3 labour report, with a large jump in unemployment likely to weaken the appeal of the Rand.
Top ZAR data releases:
Nov 9 ZAR Business Confidence (Oct)
Nov 11 ZAR Manufacturing Production (Sep)
Nov 12 ZAR Unemployment Rate (Q3)
CAD – Canadian Dollar Mixed amid Fluctuating Oil Prices
Trade in the Canadian Dollar was a little mixed this week, with the oil-sensitive currency experiencing some volatility in response to dramatic swings in crude prices due to concern that demand could be significantly dented by coronavirus restrictions in the coming months.
In the absence of any notable economic data releases next week, it’s likely we will see CAD exchange rates remain highly sensitive to oil movements, with the ‘Loonie’ poised to strengthen if the recent rally pushes prices back above $40.
ILS – Shekel Surges to Record High
The Israeli Shekel was back on the offensive this week, with the ILS exchange rate jumping to a record high against a basket of its currency peers as Israel began to emerge out of lockdown.
Coming up next week the focus will be on Israel’s latest jobless figures, where an expected fall in unemployment last month may extend the upside in the Shekel.
Top ILS data releases:
Oct 26 Industrial Production (Aug)
Oct 29 ILS Unemployment Rate (Sep)