The US dollar may be catapulted to fresh multi-month highs this week if another strong US payroll print reinforces expectations for Federal Reserve interest rate hikes.
Last week's key rate movements
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GBP/EUR – Up 0.5% on the week
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GBP/USD – Down 0.3% on the week
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EUR/USD – Down 0.7% on the week
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AUD/USD – Down 1.4% on the week
Pound (GBP)
UK political developments will likely remain the primary catalyst of movement for the pound (GBP) this week, with investors keeping a close eye on Andy Burnham as he outlines his vision for his premiership.
Euro (EUR)
The European Central Bank (ECB) will hold its annual Sintra Forum on Central Banking this week. If ECB President Christine Lagarde maintains the dovish tone she struck in a speech last week, the euro (EUR) could face headwinds.
US dollar (USD)
The spotlight for USD investors this week will be the latest US payroll figures. If job growth continued to outpace expectations last month, the US dollar (USD) is likely to soar in the second half of the session.
Australian dollar (AUD)
The minutes from the Reserve Bank of Australia’s (RBA) latest policy meeting will be a key focus for AUD investors this week, with the Australian dollar (AUD) poised to falter if they signal policymakers are more cautious about tightening monetary policy further.
South African rand (ZAR)
In the absence of any notable domestic data, the South African rand (ZAR) is expected to be influenced by wider market trends this week, with doubts over the US-Iran peace process potentially injecting some volatility into the emerging-market currency.
Canadian dollar (CAD)
Bank of Canada (BoC) Governor Tiff Macklem is scheduled to speak at the ECB Sintra Forum later this week, with the Canadian dollar (CAD) likely to strengthen if he drops any hints that the bank might tighten monetary policy in the coming months.
New Zealand dollar (NZD)
Movement in the New Zealand dollar (NZD) is likely to be primarily driven by market risk dynamics this week, with the ‘kiwi’ vulnerable to losses if recent investor caution persists.
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