US stimulus setbacks stoke 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 Undermined by Europe’s Coronavirus Woes
The Euro was placed on the defensive this week as record spikes in coronavirus cases across the continent resulted in a raft of new restrictions being imposed throughout the Eurozone. This in turn raised fresh questions over the bloc’s already fragile economic recovery, which is now in serious danger of collapsing in the last quarter of 2020.
In focus for EUR investors next week will be the Eurozone’s latest PMI figures, which could give way to significant weakness in the single currency if they reveal growth in the bloc’s private sector contracted this month.
Top EUR data releases:
Oct 22 EUR Consumer Confidence (Oct)
Oct 23 EUR Manufacturing PMI (Oct)
Oct 23 EUR Services PMI (Oct)
USD – US Dollar Soars amid Safe-Haven Demand
The US Dollar rallied this week, being catapulted higher on the back of significant safe-haven flows as investors were spooked by Europe’s coronavirus woes. Further denting market risk appetite was fading US stimulus optimism after the Democrats rejected Trump’s $1.8 trillion proposal.
Turning to next week’s session, with second wave concerns only growing and US political uncertainty rising ahead of next month’s presidential election, it’s likely we could see the US Dollar maintain its upward trajectory.
Top USD data releases:
Oct 22 USD Initial Jobless Claims (17/Oct)
Oct 23 USD Manufacturing PMI (Oct)
Oct 23 USD Services PMI (Oct)
GBP – Pound Fluctuates on Brexit Uncertainty
The Pound has traded in a wide range again this week in response to heightened Brexit uncertainty ahead of a self-imposed deadline and an EU leaders’ summit. Adding to the volatility was the announcement of a new tier system of coronavirus restrictions and elevation of London into the ‘high risk’ tier.
Looking ahead, Brexit and coronavirus concerns are likely to remain key catalysts for the Pound next week, with GBP investors also keeping a close eye on the UK’s latest inflation and PMI releases.
Top GBP data releases:
Oct 21 GBP Inflation Rate (Sep)
Oct 23 GBP Manufacturing PMI (Oct)
Oct 23 GBP Services PMI (Oct)
AUD – Australian Dollar Plunges in Risk-Off Trade
The Australian Dollar nosedived this week, with investors shunning the risk-sensitive ‘Aussie’ amidst a clear risk-off tone. Further denting AUD appeal were reports China had begun blocking Australian coal imports as well as data showing a disappointing rise in domestic unemployment last month.
Turning to next week’s session, the focus for AUD investors will be on the minutes from the Reserve Bank of Australia’s (RBA) October policy meeting as they look for any evidence that more monetary easing is on its way.
Top AUD data releases:
Oct 19 AUD RBA Minutes
Oct 22 AUD Manufacturing PMI (Oct)
Oct 22 AUD Services PMI (Oct)
ZAR – Rand Undermined by Debt Concerns
The South African Rand also fell victim to risk-off trade this week as well as being pressured by concerns over the country’s massive debt levels. This sell-off accelerated through the second half of the week after data showed a contraction in domestic retail sales in August.
Looking ahead, in the absence of any notable domestic data releases, the Rand is likely to be market driven, potentially leaving the emerging market currency vulnerable to additional losses.
CAD – Canadian Dollar Flat as Oil Prices Stall
The Canadian Dollar struggled to find direction this week amidst the absence of any notable CAD data releases and little movement in oil markets.
Coming up next week, the focus for CAD investors will be on Canada’s consumer price index. Will a rebound in inflation last month help to bolster CAD exchange rates?
Top CAD data releases:
Oct 21 CAD Inflation Rate (Sep)
ILS – Shekel Rallies on End of Lockdown Hopes
The Israeli Shekel shot higher this week, with the currency soaring on the back of hopes that the second lockdown will soon come to an end and Israel’s economy will start to open back up.
Looking ahead, ILS investors are likely to keep a close eye on domestic coronavirus statistics as any flare ups could derail any plans to lift the lockdown.
Top ILS data releases:
Oct 18 ILS GDP Growth Rate QoQ 3rd Est Q2