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Brexit, US-China trade tensions, and central banks in focus

Pound - GBP

Pound waiting for Brexit developments

The Pound fell last week against the US Dollar, weakening to its lowest levels in a month as Brexit concerns weighed. With apparently little developments in cross-party talks, and successors to Theresa May likely to be pro-leave, the risk of a no-deal Brexit is back on the table which has dented the Pound. This week, Theresa May has suggested returning to Brussels to try and renegotiate with the EU to reflect Labour’s demands for the deal; however, there’s speculation this gesture could be too little, too late. Meanwhile, the Labour Party is divided on the topic of a second referendum, but the debate appears to be heating up. Tuesday could be an interesting day for the UK economy with the latest labour market stats due out. Average Weekly Earnings and Employment Change figures will be in focus. 

Euro - EUR

Eurozone economic growth in focus

The Euro spent last week in a tight range against the US Dollar but was able to gain against Sterling as the British currency weakened. A rise in global trade tensions could impact economic growth in the Eurozone too, so upcoming data will be closely monitored. Influential German and Eurozone ZEW Surveys will be out in Tuesday’s session, alongside Eurozone Industrial Production numbers. Meanwhile, Wednesday will detail levels of German and Eurozone economic growth in the first quarter, while Friday will give the final inflation reading for April for the currency bloc. 

US Dollar - USD

Trump raises tariffs

US President Donald Trump implemented tariffs on over $200 billion of Chinese goods last week. China has vowed to retaliate, which may shake markets, especially if economic growth is dented as a result of the trade tensions. The ongoing trade dispute is likely to see safe-haven currencies gain, such as the Swiss Franc and Japanese Yen. There are a few high-tier ecostats out from the US this week including Advance Retail Sales on Wednesday, and the University of Michigan Sentiment reading on Friday. However, a lot of the Dollar’s movement could be determined by geopolitical tensions. 

Australian Dollar - AUD

RBA holds interest rates steady

The Reserve Bank of Australia (RBA) choose to keep interest rates on hold last week, which allowed the Australian Dollar to make some small gains, but concerns over global trade kept the Aussie’s climb in check. The week has begun with a dive in the Australian Home Loans data for March; while economists had forecast a -0.5% decline, the actual print came in at -2.8%. Tuesday will see Business Confidence data out, ahead of Consumer Confidence and Wage Price Index on Wednesday. Thursday will finish the week with the latest labour market figures which may have a significant influence on the Aussie Dollar. 

New Zealand Dollar - NZD

Kiwi weakens on rate cut 

The New Zealand Dollar hit a six-month low last week after the Reserve Bank of New Zealand (RBNZ) opted to cut interest rates. Any further interest rate cuts could again be detrimental for the Kiwi Dollar; economic data will be watched closely between policy meetings. It’s a relatively quiet week for New Zealand economic data, but the latest Manufacturing Purchasing Managers’ Index (PMI) will be released on Thursday which could influence the Kiwi Dollar moderately. 

Canadian Dollar - CAD

Loonie climbs as labour data impresses

The Canadian Dollar reached a nine-day high against the US Dollar on Friday after healthy labour market data increased hopes that the Bank of Canada (BoC) might not make a rate cut in the near future. The Canadian Net Change in Employment figure showed 106.5K jobs were added in April, the largest monthly increase on record—forecasts were for only 15.0K. Wednesday will see the release of the Canadian inflation numbers for April, with an expectation for a rise from 1.9% to 2.0% on the year. On Thursday the Bank of Canada (BoC) will release its Financial System Review.