The rebound in the US dollar at the end of last week's session may prove short-lived, with renewed Federal Reserve interest rate hike expectations potentially being tested by another soft US payroll print on Friday.
Last week's key rate movements
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GBP/EUR – Unchanged on the week
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GBP/USD – Down 0.8% on the week
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EUR/USD – Down 0.8% on the week
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AUD/USD – Unchanged on the week
Pound (GBP)
A scheduled speech by Bank of England (BoE) Governor Andrew Bailey will likely be the primary focus for GBP investors this week, with the pound (GBP) potentially coming under pressure if Bailey remains cautious regarding any monetary tightening later in the year.
Euro (EUR)
The euro (EUR) could receive an early boost this week with the release of the Eurozone’s consumer price index. August’s preliminary figures are forecast to report inflation pushed back above 3%, likely helping to underpin bets the European Central Bank (ECB) will deliver an interest rate hike this month.
US dollar (USD)
The primary catalyst of movement for the US dollar (USD) this week will undoubtedly be the release of the latest US non-farm payroll report. If US employment growth continued to disappoint in August, it may temper renewed Federal Reserve rate hike bets and drag on the 'greenback'.
Australian dollar (AUD)
Australia’s latest GDP figures may help to underpin the Australian dollar (AUD) this week, with consensus estimates predicting the economy will have expanded at a steady pace in the second quarter.
South African rand (ZAR)
In the absence of any notable domestic data, movement in the South African rand (ZAR) is likely to be tied to market risk dynamics this week, with a more cautious mood following the shift in Fed rate hike expectations potentially limiting demand for the emerging market currency.
Canadian dollar (CAD)
Ongoing US-Canada trade tensions are likely to act as a headwind for the Canadian dollar (CAD) this week, with any losses potentially being compounded by the publication of Canada's latest jobs figures at the end of the week, if August's data reports a slowdown in employment growth.
New Zealand dollar (NZD)
An expected interest rate hike from the Reserve Bank of New Zealand (RBNZ) could revive demand for the New Zealand dollar (NZD) this week, so long as its forward guidance maintains a hawkish bias.
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