The deadline for US President Donald Trump’s ultimatum to Iran looms large at the start of this week and could trigger significant volatility in the currency market throughout the session.
Last week’s key rate movements
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GBP/EUR – Down 0.6% on the week
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GBP/USD – Down 0.5% on the week
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EUR/USD – Down 0.2% on the week
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AUD/USD – Unchanged on the week
Pound (GBP)
In the absence of any notable UK economic indicators, GBP investors are likely to keep a close eye on the UK bond market and how it reacts to external developments. Fresh concerns over the energy price crisis could cause yields to surge and weigh on the pound (GBP).
Euro (EUR)
Germany’s latest industrial data will be the primary focus for EUR investors this week, with the euro (EUR) potentially firming if factory orders and industrial production rebounded in February.
US dollar (USD)
US President Donald Trump’s ultimatum to Iran will inject volatility into the US dollar (USD) this week, with the direction determined by whether he again extends his deadline. On the data front, USD exchange rates will also be influenced by the latest US consumer price index, where a sharp rise in inflation last month may boost Federal Reserve interest rate hike bets and lift the ‘greenback’.
Australian dollar (AUD)
Australian data is in short supply this week, leaving the Australian dollar (AUD) exposed to wider market trends. If the conflict in Iran continues to dominate markets, demand for the ‘Aussie’ is likely to be limited.
South African rand (ZAR)
The South African rand (ZAR) will likely face an uphill battle this week, as geopolitical uncertainty and rising crude prices limit the appeal of the emerging-market currency.
Canadian dollar (CAD)
While higher oil prices are likely to be supportive of the Canadian dollar (CAD) this week, the ‘loonie’ could still face resistance later in the session if data shows that Canadian unemployment ticked higher again last month.
New Zealand dollar (NZD)
The Reserve Bank of New Zealand (RBNZ) will deliver its latest rate decision this week. Economists expect the bank to keep rates on hold this month, but any signals that future tightening might be on the table could help to boost demand for the New Zealand dollar (NZD).
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