After being dominated by the latest interest rate decisions from the Federal Reserve and Bank of England (BoE) last week, a relative lack of high-impact macroeconomic releases will likely see movement in the FX market driven by geopolitical developments, which may favour the US dollar if this reinforces investor caution.
Last week's key rate movements
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GBP/EUR – Unchanged on the week
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GBP/USD – Down 1% on the week
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EUR/USD – Down 1% on the week
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AUD/USD – Down 0.6% on the week
Pound (GBP)
The preliminary PMIs for September will offer further insight into the UK’s economic performance this week, with the pound (GBP) potentially coming under pressure if private sector activity moderated at the end of the third quarter.
Euro (EUR)
The Eurozone’s own PMIs will likely act as the primary catalyst for the euro (EUR) this week, with another month of robust growth in the bloc’s private sector in September likely to reflect positively on the single currency.
US dollar (USD)
Ongoing geopolitical uncertainty may underpin the US dollar (USD) this week, though a slump in US durable goods orders could act as a headwind for the currency by the end of the session.
Australian dollar (AUD)
Australia’s latest jobs report will be in the spotlight this week, with a recovery in employment growth likely to extend the Australian dollar’s (AUD) bullish run as it reinforces expectations for the Reserve Bank of Australia (RBA) to deliver another interest rate hike at its next meeting.
South African rand (ZAR)
The South African Reserve Bank (SARB) will deliver its latest interest rate decision this week. A widely expected rate hike should help to underpin the South African rand (ZAR), so long as the bank doesn’t wrong-foot investors again, as it did in July.
Canadian dollar (CAD)
Softening oil prices and underwhelming domestic retail sales figures pose a potential risk to the Canadian dollar (CAD) this week.
New Zealand dollar (NZD)
In the absence of any notable domestic data, the direction of the New Zealand dollar (NZD) this week is likely to be dictated by wider market trends. If a risk-averse mood prevails, the ‘kiwi’ is likely to falter.
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