A souring market mood pressured risk-sensitive currencies last week, while hints at a coming interest rate cut from Federal Reserve Chair Jerome Powell at the end of the week saw the US dollar slash its weekly gains.
Last week's key rate movements
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GBP/EUR – Down 0.3% on the week
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GBP/USD – Down 0.2% on the week
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EUR/USD – Up 0.1% on the week
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AUD/USD – Down 0.2% on the week
Pound (GBP)
Market-moving UK data is thin on the ground this week, with the Confederation of British Industry’s (CBI) latest distributive trades survey being the only release that could cause movement. If retail sales volumes declined again in August, the pound (GBP) could weaken.
Euro (EUR)
The European Central Bank’s (ECB) policy meeting minutes are due to be published this week. If they indicate that interest rates are at or close to neutral levels, the euro (EUR) could enjoy support.
US dollar (USD)
On Friday, the latest US core PCE price index could boost the US dollar (USD). The Federal Reserve’s preferred indicator for inflation is forecast to tick higher, which could dampen Fed rate cut bets and lift USD exchange rates.
Australian dollar (AUD)
The Australian dollar (AUD) could strengthen on Wednesday morning if the latest monthly CPI indicator shows Australian inflation rose in July. This could see markets trim bets on further Reserve Bank of Australia (RBA) rate cuts, with the RBA recently indicating a data-dependent policy path.
South African rand (ZAR)
South Africa’s latest trade figures are the focus for ZAR investors this week. The South African rand (ZAR) could stumble if the data shows a narrowing trade surplus, as expected.
Canadian dollar (CAD)
The Canadian dollar (CAD) may face headwinds later this week, with Canada’s latest GDP figures forecast to show that the country’s economy slowed in the second quarter.
New Zealand dollar (NZD)
An expected improvement in New Zealand business confidence could lend the New Zealand dollar (NZD) some support this week.
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