The Pound reached its highest level in six months against the Euro last week as optimism increased that a Conservative Party win could occur in the December election. This is largely seen as Pound positive to speed the Brexit process up and remove the chance of a no-deal exit. The Pound is starting the week strong following polls released on the weekend showing the Conservative Party is keeping hold of its lead against Labour. A YouGov poll released on Saturday suggested the Tories had increased the lead by three points. It’s not a huge week for influential UK data, but several medium-tier events could influence the Pound, such as manufacturing and services ecostats. Despite the data, Sterling movement will largely be determined by UK politics.
The Euro climbed against the US Dollar on Friday as US-China trade talk optimism boosted other currencies. Eurozone growth data surprised last week, coming in at 1.2% on the year in the third quarter, rather than the 1.1% In the week ahead, the Euro may feel the influence of the European Central Bank’s Financial Stability Review on Wednesday, as well as the Organisation of Economic Co-operation and Development’s (OECD) Economic Outlook on Thursday. Other data points include German growth readings and Eurozone manufacturing and services numbers. One interesting event this week could come on Thursday when new ECB President Christine Lagarde speaks in Frankfurt.
The US Dollar was broadly softer last week after inflation and employment data disappointed. US inflation on the year came in softer than forecast, slipping to 2.3% from 2.4%. Additionally, US Initial Jobless Claims came in at 225K in the week through November 9th, climbing higher than the 215K forecast. It’s quite a quiet week for US data, but Wednesday will see the release of the latest Federal Open Market Committee meeting minutes from October 30th. Markets will be keen to see the details of the meeting in an attempt to gain a glimpse at policy direction moving forward.
The New Zealand Dollar jumped last week as the Reserve Bank of New Zealand kept interest rates on hold at 1.0%, rather than cutting to 0.75% as markets had expected. Meanwhile, the Australian Dollar stumbled on Thursday following disappointing Australian employment data—some market experts have suggested the ongoing trade war between the US and China could be causing job losses. The Australian and New Zealand Dollars have been particularly susceptible to the impact of trade uncertainty and fluctuating risk appetite throughout the dispute.
This week, the Reserve Bank of Australia will release its latest meeting minutes from its November policy meeting, and Aussie manufacturing and services data will also be in focus. Meanwhile, New Zealand Credit Card Spending and Retail Sales data will also be in focus.
On Friday, the Canadian Dollar steadied on optimism surrounding the US-China trade war. The Canadian Dollar to US Dollar exchange rate hit a one-month low earlier in the week due to doubts about a resolution between the two nations and concerns regarding a global slowdown. Additionally weighing on the CAD exchange rate, was the Bank of Canada’s downwardly revised economic growth forecasts. The Canadian Dollar to US Dollar exchange rate has slipped by as much as 1.3% since October 30th. This week, the October Canadian inflation reading will be out with forecasts to remain at 1.9% on the year—any deviation could provide the CAD exchange rate with an opportunity to move. Meanwhile, Bank of Canada Governor Stephen Poloz will give a fireside chat in Toronto on Thursday, which could move the Loonie, particularly if interest rates are mentioned.