Currency news and seasonal opening hours
As we’re now approaching Christmas and markets are likely to quieten, our next market update will be on Monday 4th January. However, we are open during the festive period; should you need to make a transfer, please contact our team on 020 7989 0000.
Christmas Eve – 8:00am – 1:30pm
29th, 30th, 31st December, 9:00am – 4:00pm
Wishing you a very Merry Christmas,
The Global Reach Team
Pound sinks as bad news hits
Between Monday and Thursday last week, the Pound managed to climb around 2.5% against the US Dollar and by approximately 2.0% against a basket of other majors as Brexit deal optimism enhanced Sterling sentiment. The Pound has plunged since Friday as news about a new strain of the coronavirus in Britain circulated. So far, ten EU countries (with more expected to make similar announcements) have banned travel to the UK, with some also temporarily banning freight, increasing concerns amid haulier firms, with some suspending shipment. In the week ahead, the Pound is likely to be very sensitive to Brexit and coronavirus news, especially against the backdrop of a quiet data calendar. The only figure of note out this week will be the final Q3 growth stat, expected to show a -9.6% contraction on the year, but a 15.5% rebound on the quarter.
Eurozone confidence data ahead
The Euro's had a positive month so far against the US Dollar, and while the European Central Bank has suggested it doesn't wish the currency to climb too significantly against the US Dollar, policymakers find their hands tied, unable to bring the common currency lower. However, this week begins with the Euro giving up some of its gains which could be due to the state of Brexit negotiations or news of the new coronavirus strain. Eurozone consumer sentiment data will be released today, with expectations for a slight improvement in December, from -17.6 to -16.8. German consumer confidence readings will be out tomorrow, followed by import prices on Wednesday.
Dollar, going up
The US Dollar has been softening in December as coronavirus vaccines have boosted sentiment for riskier assets. Against a basket of other major currencies, the US Dollar is more than 12.0% lower than its levels in March. Meanwhile, the US has reached a Covid stimulus plan deal worth $900bn, to extend the Paycheck Prevention Plan as well as support further unemployment benefits. The Dollar has climbed against other majors including the Pound—after sinking to two-and-a-half-year lows against a basket of currency majors last week—following news of the deal, particularly against a backdrop of a new coronavirus strain in the UK and no Brexit deal in sight. In the week ahead, the final US Q3 growth rate number will be out, as well as consumer sentiment and inflation readings. Durable Goods Orders will be the last high-tier data release of the week out on Christmas Eve.
AUD and NZD
Employment and growth data support Oceanic currencies
Last week the Aussie was able to climb on strong jobs data for the month of November, showing a fall in the unemployment rate to 6.8%. Data like this could support the Aussie as investors limit their expectations of further easing from the Reserve Bank of Australia. Meanwhile, the Kiwi jumped after robust growth figures which allowed it to hover near fresh multi-year highs. Q3 showed a 14.0% increase on the quarter, pulling the New Zealand economy out of a technical recession after contractions in both Q1 and Q2.
Negative news regarding Brexit and the coronavirus in the UK has created US Dollar strength, and other currencies such as the Aussie and Kiwi Dollars have also softened against the Buck as it's climbed. With Christmas fast approaching, the data calendar is light, with only Australian Retail Sales worth noting due out in the week ahead, leaving the Trans-Tasman currencies sensitive to geopolitical developments.
Further strength forecast
The Canadian Dollar has climbed by around 14% against the US Dollar since March, and a Reuters poll expects the Canadian Dollar to increase further as the currency benefits from domestic economic stimulus amid a rollout of the coronavirus vaccine. Some economists have suggested the Canadian economic rebound could outperform many others, given the policy support this year. Additionally supporting the Loonie is the price of oil—Canada's largest export—with oil prices having risen by around 30% since the beginning of November. In the week ahead, Canadian housing data and building numbers will be out, along with October's growth figure, and wage data.