Sterling slips as Brexit optimism dims

 

Pound - GBP 

GBP/USD reaches three-week high

Last week, the Pound reached levels of $1.3176 against the US Dollar (GBP/USD), a three-week high. Brexit created positive market sentiment allowing the Pound to climb, but towards the end of the week Sterling softened as questions over the Northern Irish border came to light once again. Additionally, Transport Minister Jo Johnson resigned over Theresa May’s Brexit plan, and backed calls for another referendum. It’s a big week for UK data ahead, with several economic readings that could influence the Pound. The UK will release labour market data on Tuesday which will detail Average Weekly Earnings and Employment Change figures; a surge in wage growth could offer Sterling a boost. UK inflation numbers will print on Wednesday; however, Brexit is likely to be one of the Pound’s main drivers. 

Euro - EUR

Euro Area growth forecasts disappoint

The Euro didn’t enjoy a particularly positive end to the week, declining against several majors after the European Commission warned that the Euro Area could suffer from a slowdown in growth. A weaker level of global economic activity, heightened trade tensions, sluggish employment growth and uncertain investment prospects could all contribute to a downturn in the next few years. This week, Eurozone Economic Sentiment data will be out on Tuesday. October noted a -19.4 contraction, and a fall further into negative territory could occur after other ecostats have signalled a lack of positive sentiment. Eurozone growth numbers will be out on Wednesday, followed by the final October Eurozone inflation reading on Friday. 

US Dollar - USD 

Midterm election results could cause political problems for Trump

The US Dollar experienced weakness throughout the week as midterm elections took the spotlight. President Donald Trump may find himself facing a few problems after the Democrats took control of the House of Representatives, meaning they could potentially hold up legislation or start impeachment proceedings. By the end of the week, the Dollar had clawed back some lost ground after the Federal Reserve’s latest monetary policy decision. Markets mostly expect another rate hike in December, Wednesday could be a day to watch for those interested in the US Dollar when the latest US inflation reading reaches markets. It could be significant for Dollar movement as investors weigh how likely the Federal Reserve is to hike rates in December in what would be its ninth rate hike since late 2015. Additionally, on Wednesday Fed Chair Jerome Powell will be speaking, which could be influential for the Greenback. US Advance Retail Sales numbers will be out on Thursday. 

Australian Dollar - AUD 

Aussie hits six-week high

The Aussie hit a six-week high last Wednesday against the US Dollar (AUD/USD) as markets digested the US midterm results. Meanwhile, strong Chinese data offered the Aussie a boost later in the week too. Tuesday will see the release of Australian Business and Consumer Confidence data, but the most important day for Aussie economic readings is likely to be Thursday. The Australian Unemployment Rate, Employment Change, and Consumer Inflation Expectation numbers will reach markets and could be very influential for the AUD exchange rate. 

New Zealand Dollar - NZD

New Zealand unemployment rate tumbles 

Last week the New Zealand Dollar had the opportunity to make some gains against the Pound (NZD/GBP) as Brexit fears and disappointing growth forecasts from the European Commission hit markets. Additionally, the New Zealand Unemployment Rate sank from 4.4% to 3.9% in Q3, while the Employment Change figure also came in better-than-forecast at 2.8%. The week begins with New Zealand Card Spending figures, but the most important piece of economic data for the Kiwi will be out on Thursday. The New Zealand Manufacturing Purchasing Managers’ Index (PMI) will print; the September reading resided at 51.7, just above the 50.0 level which separates expansion from contraction.

Canadian Dollar - CAD

Canadian dollar falls to eight-week low

The Canadian Dollar hit an eight-week low against its US Dollar counterpart (CAD/USD) last week as the Federal Reserve stayed on course to raise interest rates gradually. Also pressuring the Canadian commodity currency lower was an increase in global crude oil supply—one of Canada’s biggest exports—which resulted in lower prices. It’s a slow week for Canadian domestic data, with only one figure of moderate influence scheduled for release. The latest Canadian Existing Home Sales stat will be out on Thursday; the September number came in at -0.4%, and so a step into positive territory would be needed to offer the CAD exchange rate some support.