The US dollar slumped last week as markets scaled back Federal Reserve interest rate hike bets following the Fed’s latest policy decision and weaker-than-forecast US GDP figures.
Last week's key rate movements
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GBP/EUR – Down 0.2% on the week
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GBP/USD – Up 1.1% on the week
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EUR/USD – Up 1.3% on the week
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AUD/USD – Up 0.3% on the week
Pound (GBP)
High-impact UK economic data is thin on the ground this week, with the UK’s final services PMI being the only key release. The pound (GBP) could enjoy modest support if the survey confirms that the British services sector returned to growth in July.
Euro (EUR)
New data from Germany could drive movement in the euro (EUR) this week. If factory orders and industrial production in the Eurozone’s largest economy slowed in June, the single currency could face pressure towards the end of the week.
US dollar (USD)
The latest ISM PMIs could support the US dollar (USD) this week, if they show improvements as forecast. However, the ‘greenback’ could face pressure on Friday if the latest non-farm payrolls report points to a softening labour market.
Australian dollar (AUD)
An expected improvement in Australia’s Ai Group industry index could underpin the Australian dollar (AUD) in the middle of the week. Meanwhile, market risk appetite will likely remain a key driver for AUD.
South African rand (ZAR)
South Africa’s latest PMI is forecast to show a slight acceleration in activity in July, which could offer the South African rand (ZAR) some support. Elsewhere, risk sentiment and gold price dynamics could drive volatility.
Canadian dollar (CAD)
The Canadian dollar (CAD) could catch bids on Friday if the latest Canadian jobs data shows unemployment remained low last month. However, the crude-linked ‘loonie’ may face headwinds if easing Middle East tensions see oil prices slide.
New Zealand dollar (NZD)
An expected rise in New Zealand unemployment in the second quarter could dent the New Zealand dollar (NZD) early this week, particularly if it dampens Reserve Bank of New Zealand (RBNZ) interest rate hike bets.
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