Election results are in, Brexit deadline looms
Looking towards the next Brexit deadline
Last week, the Pound gained some strength, climbing against both the US Dollar and Euro as the week went on. Sterling shifted from levels in the 1.28's at the start of the week, to the 1.31's by the close versus the US Dollar. Meanwhile, against the Euro, it escalated from readings in the 1.10's to 1.11's. The Pound was supported by the Bank of England's larger-than-anticipated increase in its bond-buying programme and the revelation from Chancellor Rishi Sunak of an extended furlough scheme now expected to end in March 2021. In the week ahead, labour market data will be in focus, along with industrial and manufacturing stats, and the preliminary Q3 economic growth readings. However, one of the other significant events on the radar this week is the self-imposed UK-EU deadline to get an agreement organised by Sunday. Bank of England speakers could also draw market attention.
Economic data in focus
Against a basket of other major currencies, the Euro ended up around 1.0% higher by the end of last week, taking advantage of a weaker US Dollar. Versus the Buck, the Euro managed to climb from levels in the 1.16's to 1.18's. Still, it's possible now the election buzz is dying down, markets will be looking more closely at the Euro's strength in comparison to the backdrop of deterioration in the bloc's economic performance. In the week ahead, European Central Bank President Christine Lagarde will be speaking, and data detailing Eurozone economic growth, German inflation, and German outlook expectations will all be released.
Election dominates USD movement
Last week, US Dollar movement dominated a lot of market fluctuations as investors waited for the election results to unfold. The Greenback felt the impact of the election, softening by around 2.0% against a host of other majors as a Biden victory became clearer. The Federal Reserve opted to keep interest rates and bond-buying unchanged. However, the central bank intimated that there could be future increases in its quantitative easing programme as higher numbers of coronavirus cases are clouding the economic outlook. Federal Reserve Chief Jerome Powell will be speaking this week which could give further indications of the bank's plans for monetary stimulus. Additionally, US inflation, confidence, and business optimism figures will be out in the week ahead.
AUD and NZD
Kiwi breaks through key resistance level
Last week, the New Zealand Dollar reached its highest level against the US Dollar since April 2019, breaking through the 0.68 mark, which has been a significant resistance level in the last few years. Meanwhile, the Australian Dollar reached its strongest point versus the US Dollar in six weeks; both AUD and NZD strength came as the US Dollar weakened on account of the US election.
In the week ahead, there are a number of stats out which could influence the Aussie and Kiwi Dollars, including Australian consumer confidence and inflation expectations. For New Zealand, retail card spending data will be published, ahead of the Reserve Bank of New Zealand's interest rate decision and follow-up press conference. Any indication as to monetary policy changes could also influence the way the Kiwi trades. Other data includes business productivity and service sector numbers.
Quiet data week ahead
The Canadian Dollar reached its highest level in nine weeks last week versus the US Dollar as the USD softened on account of the election. It's a quiet week ahead for Canadian data, with only a few very low-tier stats out for release and a speech by a Bank of Canada representative. The Loonie will therefore be susceptible to global developments and any price changes in Canada's most lucrative commodity, oil.