The Pound came under pressure last week, slipping by over 1.0% against the US Dollar and by around 3.0% versus the Euro after the UK revealed its Brexit negotiating position. British Prime Minister Boris Johnson suggested he'd walk away from negotiations with the EU if there were a lack of progress by June, in a bid to prevent EU negotiators from running down the clock. However, a decision like this would put the risk of a hard Brexit firmly back on the table—this possibility has put pressure on Sterling in recent sessions. Bank of England Governor Mark Carney is due to speak in London on Thursday, while BoE Chief Economist Andy Haldane is scheduled to speak in Paris. It's quite a light week for economic data—although UK construction data will make its way onto the market mid-week—leaving the Pound vulnerable to geopolitical developments and any Brexit back and forth.
The Euro shone against other currency majors last week, climbing by around 3.0% versus the Pound. Despite the Euro's rise last week, markets were pricing in an 80% possibility of a ten-basis point cut in interest rates by the European Central Bank in the summer. Italian growth numbers will print on Monday, followed by Eurozone inflation and unemployment data which will reach the market on Tuesday. German construction and factory data will be published at the end of the week.
The US Dollar experienced some softness last week as investors began to bet the Federal Reserve would decide to cut rates in a bid to balance the impact the spread of the coronavirus could cause. Markets have been forecasting a 25-basis point cut in US interest rates at the April meeting, with another two cuts to follow by March 2021. ISM Employment and Manufacturing data will be out in Monday's session, which could be a significant event for the US Dollar. There are a few medium and high-tier stats out in the week ahead; markets will be looking towards Friday's Change in Non-Farm Payrolls and Unemployment Rate stats to gauge how the labour market's fairing—an event which could be significant for the US Dollar.
The Australian and New Zealand Dollars both slipped last week as fears over the spread of the coronavirus and its economic impact swept the market. The Aussie Dollar marked an 11-year low after following a surprise rise in Australian unemployment. Overnight, New Zealand Retail Sales stats failed to meet expectations, which, along with some other indicators, has the potential to hamper economic growth forecasts. New Zealand Business Confidence and Trade Balance data along with Australian Private Capital Expenditure and Construction Work stats will be out in the rest of the week. Still, a lot of movement for the Kiwi and Aussie Dollars may be determined by risk sentiment in the market.
The Canadian Dollar slipped to reside near a six-month low versus the US Dollar last week, tracking the price of oil lower. Fresh cases of the coronavirus outside of China ramped up concerns that the spread would soon be classed as a pandemic. Oil prices have taken a hit to reach their lowest levels in over a year, as markets anticipated slower demand for black gold if the potential pandemic caused sluggish global growth. It could be an exciting week for the Canadian Dollar, with the Bank of Canada due to announce its latest interest rate decision on Wednesday, followed by Governor Stephen Poloz giving an economic progress report on Thursday. Friday high-tier employment and unemployment data will be released, which could be significant for the Loonie exchange rate.
The South African Rand has put in its worst performance at the start of 2020 since the Global Financial Crisis was in full swing in 2008. The Rand has tumbled by around 12% across January and February, with past data showing a consecutive five-year stumble against the US Dollar in March. Furthermore, Moody's Analytics has quoted 'elevated' risks to the country's fiscal risks, leaving markets concerned that a rating downgrade could be around the corner. Both influential manufacturing and growth rate data will be out on Monday and Tuesday, respectively, which could create further Rand volatility.