The Pound hit a one-month low against the US Dollar and tumbled against the Euro as Brexit concerns dented the Sterling exchange rate last week. However, a worsening economic outlook for the Eurozone allowed the Pound to gain against the common currency towards the end of the week. This morning’s better-than-forecast home price data has offered the Pound a little support, but Brexit developments still remain the key driver for the British currency. With only 39 days to go, the UK’s Brexit Secretary will meet EU negotiator Michel Barnier today in Brussels and Theresa May is travelling around Europe in an attempt to gain concessions on a negotiation sticking point—the Irish backstop. Any developments in Brexit could create Sterling movement, especially with voting expected to take place in parliament next week.
Downbeat Eurozone economic data saw the Euro weaken last week, and the common currency recorded its biggest one-day fall of the year so far against the US Dollar. Additionally, the Euro to US Dollar exchange rate noted its worst weekly close in nearly 20 months on Friday. This week has begun with a warning from a European Central Bank (ECB) governing council member that further economic data indicating a downturn in Eurozone economic growth may encourage a change of approach in order to boost growth; this could potentially include an interest rate cut. Economic data this week will come in the form of the German and Eurozone ZEW sentiment surveys, Eurozone Consumer Confidence, and inflation data. ECB Chief Mario Draghi will also deliver a speech on Friday.
US inflation data fell last week, which offered the Federal Reserve some breathing room when it comes to monetary policy. The US markets are closed today for the annual Presidents’ Day holiday so could, therefore, be a quieter start to the week for the Buck. Wednesday will see the release of the Federal Reserve’s latest meeting minutes, which could be influential for the US Dollar should any new details regarding the future path of monetary policy emerge. Thursday will also see the release of the December Durable Goods Orders stat which may offer the USD some significant opportunity to move.
Last week, the Aussie Dollar reached its lowest level against the US Dollar since the beginning of the year. Economic data showed a sharp decline in Australian Home Loans after a steady succession of falls in the last two years. Stricter lending guidelines and a fall in overseas investment have contributed to housing market developments. The Reserve Bank of Australia (RBA) meeting minutes will be out on Tuesday and could be interesting for AUD exchange rate movement. Thursday will see the release of Australian labour market data.
Last week, the Reserve Bank of New Zealand (RBNZ) chose to keep interest rates on hold in February, at 1.75%. However, the New Zealand Dollar exchange rate jumped as much as 1.7% on Wednesday after the RBNZ stated that it forecasts interest rates will remain at their current levels throughout 2019 and 2020. This offered the Kiwi Dollar some strength as there has been much speculation as to whether the central bank may need to look at cutting rates. It’s a quiet week for New Zealand domestic data, leaving a lot of the Kiwi’s movements down to geopolitical events, but milk prices will be re-evaluated this week at auction, and New Zealand Credit Card Spending stats will be out on Friday.
The Canadian Dollar tracked oil prices on Friday and enjoyed a rally against the US Dollar supported by domestic data and optimism over a trade deal between the US and China. Canadian Existing Home Sales figures reached a surprising +3.6% on the month in January, despite forecasts for a -0.6% contraction. Bank of Canada (BoC) Governor Stephen Poloz will be making a speech on Thursday which could offer the Canadian Dollar a good opportunity to move.