After enjoying a modest reprieve last week, the euro faces fresh headwinds as unrest in France adds to concerns over the Eurozone’s second-largest economy.
Last week's key rate movements
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GBP/EUR – Up 0.4% on the week
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GBP/USD – Up 0.7% on the week
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EUR/USD – Up 0.3% on the week
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AUD/USD – Down 0.5% on the week
Pound (GBP)
GBP investors will be kept on their toes by the publication of several high-impact UK macroeconomic releases this week, the most influential of which is likely to be September’s consumer price index. If inflation accelerates, it’s likely to stoke Bank of England (BoE) rate hike expectations and lift the pound (GBP).
Euro (EUR)
French political uncertainty poses a key risk to the euro (EUR) this week as unrest over the weekend places more pressure on the government and exacerbates the country’s bond turmoil.
US dollar (USD)
US economic data is in short supply this week, likely leading movement in the US dollar (USD) to be shaped by market risk dynamics. If a cautious mood prevails, we may see USD exchange rates test new multi-month highs.
Australian dollar (AUD)
The absence of any notable domestic catalysts may limit demand for the Australian dollar (AUD) this week, particularly if risk appetite falters.
South African rand (ZAR)
South African Finance Minister Enoch Godongwana will deliver his latest medium-term budget policy statement later this week, with the South African rand (ZAR) poised to strengthen if the country’s fiscal outlook continues to improve.
Canadian dollar (CAD)
Elevated oil prices may underpin demand for the Canadian dollar (CAD) this week, although any gains may be tempered later in the week if domestic retail data points to a slowdown in consumer spending last month.
New Zealand dollar (NZD)
New Zealand’s quarterly CPI report will be in the spotlight for NZD investors this week, with the New Zealand dollar (NZD) potentially coming under pressure if a cooling of inflation in Q3 further dampens Reserve Bank of New Zealand (RBNZ) rate hike bets.
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