Vaccine hopes boost riskier assets, Brexit optimism continues
The missing 5%
Last week, the Pound noted further gains, marking its fifth consecutive week of strength against a basket of other majors. The increase in popularity has come as optimism over a Brexit trade deal has risen. The week's begun with Markit's services and manufacturing indicators for November taking a dip as lockdown takes its toll on the economy. In the rest of the week, politics might play a large part in Sterling movement. On Monday, Prime Minister Boris Johnson is expected to announce plans to restart the economy while implementing a tiered system of restriction. On Wednesday, the 2020 Spending Review will be the hot topic, and this week Brexit negotiations are expected to show some development. EU officials have suggested 95% of a trade deal is agreed on, but there are still some sticking points to resolve before the deal can be finalised. Bank of England representatives will also be speaking this week.
ECB minutes ahead
Against a basket of other majors, the Euro finished the week relatively unchanged. The common currency approached the 1.19 level against the US Dollar on occasion last week, but couldn't quite break through the barrier. There are some highly influential stats out in the week ahead, including growth, business climate, and confidence numbers from Germany. The European Central Bank will also conduct its Financial Stability Review, as well as releasing its monetary policy meeting accounts.
Dollar slips on vaccine optimism
The US Dollar slipped by around 0.5% against a basket of currency majors last week as risk appetite continued to take an upswing. The US Dollar begins the week near a two-and-a-half-year low as markets consider coronavirus vaccinations which could begin as soon as next month. The Thanksgiving holiday on Thursday has created a reshuffling of US data, with Wednesday being a busy day. Today, influential manufacturing data will be released, along with two Federal Reserve representatives speaking. In the rest of the week, more speeches from central bankers will come, as well as highly influential Consumer Confidence, Durable Goods Orders, GDP Growth Rate, and inflation stats.
AUD and NZD
The New Zealand Dollar extended gains against the US Dollar last week, reaching its highest level since April 2018. Meanwhile, the New Zealand Dollar also managed to make gains against the Pound, climbing to a two-month high. The Australian Dollar struggled to break through a key resistance level against the US Dollar (0.7350), which has been the theme for much of this month.
In the week ahead, comments from Reserve Bank of Australia representative Guy Debelle could impact the Aussie, along with construction figures. Meanwhile, the Kiwi Dollar might feel the impact of the October Balance of Trade, Imports, and Exports numbers.
The Pound reached ten-week highs against the Canadian Dollar last week; against the US Dollar, the Loonie traded back above the 1.30 level after sinking below it earlier in November. By the close of last week, the CAD/USD exchange rate was edging lower, despite higher oil prices and an upswing in retail sales, as gloomy forecasts for Canadian coronavirus cases were released. Canada's Chief Public Health Officer projected daily cases could climb from less than 5,000 now, to as many as 60,000 by the close of 2020. Meanwhile, oil prices were buoyed by the success of vaccine trials. It's a quiet week ahead in terms of Canadian data, but Average Weekly Earnings stats will be out, as well as Building Permits. Additionally, Deputy Bank of Canada Governor Toni Gravelle will make a speech today.