US Dollar

Euro Faces Setback on Dire PMI Figures, US Dollar Shaken by Powell’s Recession Warning

The Euro trended broadly higher through the first half of this week, before shedding a portion of these gains in response to lacklustre PMI releases. 

At the same time, the US Dollar seesawed this week. While the currency benefitted from risk-off flows it was also undermined by comments by the Federal Reserve’s Jerome Powell warning that a US recession is a possibility. 

Pound Fluctuates on Mixed Data 

GBP/EUR – Unchanged on the week’s opening levels 

GBP/USD – Unchanged on the week’s opening levels 

The Pound trended lower through the first half of this week as a modest rise in UK inflation prompted GBP investors to revise their Bank of England (BoE) rate hike bets.  

Stronger-than-expected UK PMIs then helped Sterling to bounce back, although these gains were capped by a slump in domestic retail sales and fresh UK political uncertainty. 

Turning to next week, the Pound may remain muted amid ongoing recession fears and continued political uncertainty. 

Euro Falters as Eurozone PMIs Disappoint 

EUR/GBP – Unchanged on the week’s opening levels 

EUR/USD – Up one cent on the week’s opening levels 

The Euro trended broadly higher through the first half of this week, bolstered by some hawkish comments from European Central Bank (ECB) policymakers.  

But the single currency then faltered in the second half of the week, on the back of some dismal Eurozone PMIs as well as concerns over European energy security. 

The spotlight next week will be on the Eurozone’s consumer price index. Will another acceleration of inflation bolster ECB rate hike bets and lift the Euro? 

US Dollar Slips on Powell’s Recession Warning 

USD/GBP – Unchanged on the week’s opening levels  

USD/EUR – Unchanged on the week’s opening levels  

The US Dollar was undermined by Federal Reserve Chair Jerome Powell’s congressional testimony this week as he warned more aggressive rate hikes from the bank increases the risk of a US recession.  

Despite this the ‘Greenback’ was able to find modest gains in the latter half of the week thanks to risk-off flows. 

Looking ahead, the US Dollar could stumble at the start of next week amidst forecasts durable goods orders will have slumped last month. 

Australian Dollar Dented by Weak Risk Appetite 

AUD/GBP – Unchanged on the week’s opening levels 

AUD/USD – Down one cent on the week’s opening levels 

The Australian Dollar initially held its ground this week, with some dovish comments from Reserve Bank of Australia (RBA) Governor Philip Lowe being offset by a positive risk-tone. 

However, the subsequent souring of market sentiment in addition to a slump in commodity prices left the ‘Aussie’ to stumble through the latter half of the session. 

Australia’s latest retail sales figures will be the primary focus for AUD investors next week. Will a slowing of sales growth apply some pressure to the ‘Aussie’ in the first half of the session? 

Key Data  

Jun 27 USD Durable Goods Orders (May)  

Jun 29 AUD Retail Sales (May) 

Jun 29 EUR German Inflation Rate (Jun)  

Jun 30 GBP GDP (Q1) 

Jun 30 EUR German Retail Sales (May)  

Jun 30 USD PCE Price Index (May)  

Jul 1 GBP Manufacturing PMI (Jun) 

Jul 1 EUR Inflation Rate (Jun)  

Jul 1 USD ISM Manufacturing PMI (Jun)