FX weekly forecast: Anaemic payroll figures to extend US dollar selloff?

The US dollar tumbled to a new three-year low last week as a ceasefire between Israel and Iran, coupled with renewed concerns over the Federal Reserve’s future independence, significantly diminished the appeal of the currency.

Last week’s key rate movements

• GBP/EUR – Up 0.3% on the week
• GBP/USD – Up 1.9% on the week
• EUR/USD – Up 1.7% on the week
• AUD/USD – Up 1% on the week

Pound (GBP)

In the absence of any notable UK economic releases, the direction of the pound (GBP) is likely to be primarily influenced by wider market trends this week. A positive mood could see Sterling appreciate against its safer peers. 

Euro (EUR)

This week sees the release of the Eurozone’s latest consumer price index. If June’s preliminary figures report an uptick in inflation, it may help to further temper European Central Bank (ECB) interest rate cut bets and lift the euro (EUR).

US dollar (USD)

A key focus for USD investors this week will be the latest US payroll figures. Economists forecast the number of jobs added last month will have fallen again, which could see the US dollar (USD) test new lows.

Australian dollar (AUD)

The Australian dollar (AUD) is likely to face resistance later this week if Australia’s latest trade figures report that exports continued to shrink in May.

South African rand (ZAR)

The South African rand (ZAR) may prove highly sensitive to domestic politics this week, amid signs of growing tensions within the ruling coalition government.

Canadian dollar (CAD)

In the absence of any notable domestic data, the movement of the Canadian dollar (CAD) is likely to be closely tied to oil price dynamics this week. This may pull the ‘loonie’ lower, amid signs last week’s modest rally has already run out of steam.

New Zealand dollar (NZD)

The New Zealand dollar (NZD) is likely to be sensitive to market risk appetite this week, with the ‘kiwi’ likely to strengthen if continued progress in US trade talks helps to cheer markets.

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