Politics, central bank announcements, and influential data ahead

 

Pound - GBP 

GBP/USD sinks to 20-month lows amid Brexit chaos

Last week was an incredibly tricky one for the Pound which sank to a 20-month low against the US Dollar. Brexit weighed on Sterling in many sessions, and a vote of no confidence in Theresa May created dramatic Sterling fluctuations at the start of the week. Theresa May is coming under intense pressure to give Parliament a say on Brexit before Christmas, and she’s expected to address MPs on Monday and ask that they not demand a second referendum. One of the biggest pieces of economic data this week will be the UK inflation reading on Wednesday, which is expected to fall from 2.4% to 2.3%. Thursday will be another interesting day with the UK Retail Sales stat and the Bank of England’s (BoE) interest rate decision due out. Although interest rates aren’t expected to move from 0.75%, any indication on monetary policy and the impact of Brexit could give the Pound a reason to move.

Euro - EUR

ECB ends QE

The Euro experienced fluctuations of its own last week and slipped when European Central Bank (ECB) Chief Mario Draghi announced that the central bank would be ending its quantitative easing scheme, but had trimmed its Euro Area growth forecasts. Tuesday could be an interesting day for the Euro with the release of data detailing German sentiment. Friday will also see the German and Eurozone Consumer Confidence figures released which may offer the common currency some moderate movement.

US Dollar - USD 

Fed interest rate decision ahead

The safe-haven allure of the US Dollar was prominent last week, with the US currency climbing on several occasions. The US Retail Sales stat came in better than forecasts had suggested, which allowed for some gains, and eyes turned to this week’s Federal Reserve decision. Wednesday is expected to be a particularly volatile day for the Pound this week with the Federal Open Market Committee’s (FOMC) December monetary policy meeting and interest rate decision taking place. The market is split on whether policymakers will increase interest rates, and so the decision and follow-up press conference by Fed Chair Jerome Powell will be closely watched and could see some significant USD movement.

Australian Dollar - AUD 

Australia Dollar softens on global outlook

The Australian Dollar had a poor end to last week, falling to fresh one-and-a-half month lows against the US Dollar after weaker Chinese data emerged. A decline in the Chinese industrial sector hindered the Australian outlook and reignited global slowdown concerns. Tuesday will see the Reserve Bank of Australia (RBA) release its December 4th meeting minutes, but it’s unlikely this event will reveal anything new. However, Thursday’s Employment Change and Unemployment Rate figures could be influential for the Australian Dollar and may give the RBA something to consider in the new year.

New Zealand Dollar - NZD

New Zealand growth numbers in focus

Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr suggested the central bank was under-resourced last week after extra pressure on its regulatory side, causing concern amongst experts. Last week also saw a decline in New Zealand Retail Card Spending, which slipped by -0.4% in November. There are a few medium-tier New Zealand figures due out in the week ahead, as well as a dairy auction which could offer the Kiwi Dollar some direction. However, eyes will most likely be focused on Wednesday’s Gross Domestic Product (GDP) reading as the most influential piece of scheduled data.

Canadian Dollar - CAD

Markets await Canadian inflation data

The Canadian Dollar has had a tough time of late, with falling oil prices pressuring the currency lower. The Canadian currency has been feeling the heat since mid-November and has softened by around a cent against the US Dollar since. A few interesting Canadian ecostats will be out in the week ahead, such as inflation data on Wednesday. Economists expect inflation to sink from 2.4% to 1.8%, which could bode badly for the Canadian Dollar as investors try to price in the effect softer consumer prices could have on interest rates. Meanwhile, Friday will reveal the October growth numbers, with annual expansion expected to edge up from 2.1% to 2.2%.