US political uncertainty may act as a key catalyst for currency movement this week, with the US dollar potentially facing an uphill battle if the mid-term elections flip the House of Representatives and the Senate.
Last week’s key rate movements
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GBP/EUR – Up 0.5% on the week
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GBP/USD – Unchanged on the week
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EUR/USD – Down 0.4% on the week
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AUD/USD – Unchanged on the week
Pound (GBP)
The Bank of England (BoE) will deliver its latest interest rate decision later this week. A widely expected rate hike from the bank could strengthen the pound (GBP) in the latter half of the session, although a dovish tilt to its guidance could ultimately cap the currency's upside potential.
Euro (EUR)
The Eurozone's preliminary inflation figures for October could help lift the euro (EUR) this week, as rising prices will place more pressure on the European Central Bank (ECB) to resume its hiking cycle.
US dollar (USD)
A potential 'blue wave' in the US mid-term elections poses a key risk to the US dollar (USD) this week, as do the latest US non-farm payroll figures, which may weigh heavily on USD at the end of the week if they point to further weakness in the US labour market last month.
Australian dollar (AUD)
The Reserve Bank of Australia’s (RBA) latest interest rate decision will be in the spotlight for AUD investors at the start of this week, with the Australian dollar (AUD) poised to rise if the bank hikes rates as forecast, while also leaving the door open to further tightening in the future.
South African rand (ZAR)
Movement in the South African rand (ZAR) is likely to be tied to market sentiment this week amid the absence of any notable domestic data. Fears of a potential re-escalation of tensions in the Middle East could limit demand for the emerging market currency.
Canadian dollar (CAD)
Another soft labour report may place pressure on the Canadian dollar (CAD) at the end of this week's session as it would weaken the case for the Bank of Canada (BoC) to continue tightening monetary policy.
New Zealand dollar (NZD)
New Zealand’s latest jobs data is expected to report a fall in unemployment in the third quarter. However, any resulting upside in the New Zealand dollar (NZD) may be tempered ahead of a general election taking place on Saturday.
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