Brexit lifts Pound on customs deal prospects

 

Pound - GBP 

Has Theresa May secured a deal?

Last week, the Pound broke above the 1.14 level against the Euro and the 1.30 benchmark against the US Dollar on positive Brexit sentiment. Reports over the weekend that Theresa May has made a Brexit deal which would keep the UK in the customs union has kept the Pound's upward momentum going into this week. The British currency has been bolstered against other majors, and Sterling has reached its highest level against the US Dollar since October 22nd. The most significant economic event for the Pound this week will likely be Friday’s UK Gross Domestic Product (GDP) reading. The third quarter growth figure is expected to reach 1.5%, a step up from the previous 1.2% reading, which could offer Sterling a boost. Additionally, this week’s cabinet meeting could prove pivotal for the GBP exchange rate as Brexit is discussed.

Euro - EUR

Eurozone growth raises concerns

Last week, the Euro tumbled as growth and confidence in the currency bloc slipped, raising concerns the economy could be faltering. The development comes at a crucial time where the European Central Bank (ECB) is attempting to wind down its asset purchase programme. ECB Chief Mario Draghi has stated that he doesn’t think the currency bloc is headed for a downturn, but more negative data could change his tune. Euro-area finance ministers are set to meet in Brussels on Monday to discuss the problem with Italy’s budget. It’s a relatively quiet week for Eurozone data, but there are a few moderately important pieces out. Eurozone Retail Sales numbers will be printed on Wednesday, and the European Central Bank will publish its Economic Bulletin on Thursday.

US Dollar - USD 

US wages register biggest gain in nine-and-a-half years

Last week’s most important US data came in the form of the Change in Non-Farm Payrolls reading. The October job growth rebound was impressive, while wages registered their biggest annual gain in almost a decade. Investors will be watching to see if upbeat economic data gives the Federal Reserve a more hawkish edge. Some of the most influential US Dollar events this week could be political. Tuesday will see the US midterm elections take place, which will be significant for Donald Trump and his future as President. If Democrats were able to gain control of the House, it would give them the ability to start impeachment proceedings against Trump. The Federal Reserve will also make its latest interest rate decision on Thursday.

Australian Dollar - AUD 

RBA volatility expected

The Australian Dollar had been enjoying a rally but has now pulled away from five-week highs against the US Dollar following last week’s strong US jobs data. Volatility is expected ahead of this week’s central bank events; Tuesday and Thursday could be interesting days for the Australian Dollar. The Reserve Bank of Australia (RBA) will announce its latest cash rate target on Tuesday and is expected to keep it on hold at 1.50%. However, Friday’s RBA statement on monetary policy could shed some light on the path of policy moving forwards.New Zealand Dollar - NZD

New Zealand Dollar - NZD

New Zealand banks must have tighter regulation

It’s going to be an exciting week ahead for the New Zealand Dollar. Today has seen the release of the Reserve Bank of New Zealand’s (RBNZ) report on bank culture, which has urged tighter regulation after finding ‘significant weaknesses’ in the way banks manage risk.  On Tuesday, labour market data will be revealed; economists expect the Unemployment Rate to fall from 4.5% to 4.4% in the third quarter. Meanwhile, Wednesday will see the RBNZ announce its latest interest rate decision, expected to remain at 1.75%. RBNZ Chief Adrian Orr will speak on Wednesday and Thursday, and his comments could prove to be very influential for the Kiwi Dollar.

Canadian Dollar - CAD

Canadian wages fall below forecasts

The Canadian Dollar didn’t fare so well at the end of last week when domestic employment data disappointed. The Canadian economy only added 11,200 jobs in October, a marked decrease from September’s more buoyant 63,300 increase. Economists had expected at least a 15,000 upswing. Wage growth was also lacklustre with earnings coming in at 1.9% in October on the year, down from 2.2% in September and missing the 2.3% forecast. Monday could be an exciting day for the Canadian Dollar when Bank of Canada (BoC) Governor Stephen Poloz speaks in London. If monetary policy is mentioned, there could be some CAD exchange rate movement. Meanwhile, Tuesday will see Canadian Building Permits data released, followed by Housing Price numbers on Thursday.