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 USD Strength
The Euro started strongly this week, bolstered by surging German retail sales figures and robust PMI data. However, the single currency’s gains were trimmed as the session went on as EUR sentiment was undermined by USD strength, as well as concerns around inflation and supply chain issues.
Coming up next week, the publication of the latest ZEW surveys will be the main focus for EUR investors, with the Euro poised to fall if economic sentiment in Germany continued to weaken in May.
Top EUR data releases:
May 11 EUR ZEW Economic Sentiment (May)
May 12 EUR German Inflation Rate (Apr)
May 12 EUR Industrial Production (Mar)
USD – US Dollar Rocked by Yellen Comments
The US Dollar traded in a wide range over the past week amidst volatility in US Treasury yields and mixed PMI data. Perhaps the main source of volatility, however, were comments made by, and then quickly retracted by US Treasury Secretary Janet Yellen suggesting interest rates may need to rise to prevent the US economy from overheating.
Looking ahead, the US consumer price index will be in the spotlight for USD investors next week. Economists are forecasting inflation will have accelerated sharply last month, but with the Fed reluctant to raise rates this could be viewed negatively by markets.
Top USD data releases:
May 12 USD Inflation Rate (Apr)
May 14 USD Retail Sales (Apr)
May 14 USD Consumer Sentiment (May)
GBP – Pound Volatile despite Optimistic BoE Outlook
The Pound steadily advanced through the first half of this week, with easing political uncertainty and stronger-than-expected PMI figures bolstering GBP sentiment. However, the Pound slid after the Bank of England (BoE) policy report. Despite upgrading its 2021 growth forecasts, the bank’s announcement to slow bond-buying and comments on inflation failed to meet investors’ expectations and triggered a Sterling selloff.
Centre stage for GBP investors next week will be the UK’s latest GDP figures. Will a smaller-than-expected contraction of growth in the first quarter of 2021 help to buoy the Pound?
Top GBP data releases:
May 10 GBP Reopening Decision
May 12 GBP GDP (Q1)
May 12 GBP Trade Balance (Mar)
AUD – Australian Dollar Dented by China Tensions
The Australian Dollar got off to a strong start this week as the optimistic tone struck by the Reserve Bank of Australia (RBA) following its latest policy meeting reflected well on the ‘Aussie’. However, AUD faced a setback in the latter half of the week after China announced it has ‘indefinitely suspended’ all activities under the China-Australia Strategic Economic Dialogue.
AUD investors will be focused on the latest business and consumer confidence figures next week, with the Australian Dollar likely to strengthen so long as morale has continued to improve over the past month.
Top AUD data releases:
May 10 AUD Business Confidence (Apr)
May 12 AUD Consumer Confidence Index (May)
May 13 AUD Wage Price Index (Q1)
ZAR – Rand Strengthens Despite Threat of Credit Downgrade
The South African Rand fluctuated through the first half of this week’s session as mixed market sentiment left the emerging market currency on unsteady footing. However, the Rand marched higher in the latter half of the session, in spite of the threat South Africa's sovereign credit rating could be downgraded by Moody's.
Looking ahead, movement in the South African Rand is likely to remain tied to market sentiment, with the Rand likely to maintain its upward momentum so long as the mood remains positive.
Top ZAR data releases:
May 11 ZAR Manufacturing Production (Mar)
CAD – Canadian Dollar Bolstered by Rising Oil Prices
The Canadian Dollar ticked higher this week, with the commodity-linked ‘Loonie’ attracting investors as oil prices continued to climb, particularly after WTI crude passed $65 a barrel to strike a new two-month high.
Turning to next week’s session, the main focus for CAD investors will be a speech by Bank of Canada (BoC) Governor Tiff Macklem, who may send the ‘Loonie’ higher if he further hints the bank could tighten its monetary policy sooner than previously thought.
Top CAD data releases:
May 13 CAD BoC Macklem Speech
Posted in Personal Resources on May 7 2021