The apparent collapse of US-Iran peace talks as the two sides exchange attacks in and around the Strait of Hormuz looks to underpin fresh safe-haven demand this week, although a weak US inflation print could ultimately cap the US dollar’s upside potential.
Last week's key rate movements
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GBP/EUR – Up 0.6% on the week
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GBP/USD – Up 0.4% on the week
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EUR/USD – Down 0.2% on the week
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AUD/USD – Up 0.2% on the week
Pound (GBP)
The UK's latest GDP figures are likely to act as the primary catalyst for movement in the pound (GBP) this week. If May's figures report the UK economy returned to growth, it could help shore up Sterling sentiment.
Euro (EUR)
Notable Eurozone data is in short supply this week, which could leave movement in the euro (EUR) to be dictated by wider market trends, particularly regarding its inverse trade relationship with the US dollar (USD).
US dollar (USD)
The latest US consumer price index will be closely watched by investors this week. An expected deceleration in inflation last month might dent Federal Reserve interest rate hike bets and undermine the US dollar.
Australian dollar (AUD)
The publication of Australia's latest consumer and business confidence surveys may offer modest support for the Australian dollar (AUD) this week if they show that morale is improving.
South African rand (ZAR)
In the absence of any impactful domestic data, the South African rand (ZAR) may be left vulnerable to renewed geopolitical tensions in the Middle East and a weakening of market risk sentiment.
Canadian dollar (CAD)
The Bank of Canada’s (BoC) latest interest rate decision will likely act as a key driver of movement for the Canadian dollar (CAD) this week. No policy changes are expected from the BoC this month, with the ‘loonie’ poised to weaken if easing inflation risks result in a more dovish outlook from the bank.
New Zealand dollar (NZD)
Movement in the New Zealand dollar (NZD) is likely to be tied to market risk dynamics this week. If a cautious mood prevails, the 'kiwi' will likely weaken.
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