US Dollar

US Dollar Appreciates in Risk-Off Trade, Pound Struggles to Consolidate Gains in Spite of Upbeat Data

The US Dollar rallied this week as a prevailing risk-off mood more than made up for a soft US inflation reading at the start of the session. 

At the same time, in spite of some strong UK data, the Pound struggled to consolidate its gains this week amidst fresh political and economic uncertainty. 

Pound Fluctuates Despite Upbeat Data 

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

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

The Pound traded in a wide range this week. The currency found some support from some upbeat domestic data releases, included the UK’s latest CPI, which reported inflation jumped to a nine-year high last week.  

However, Sterling was simultaneously undermined by uncertainty over Boris Johnson’s cabinet reshuffle as well as ongoing concerns over the UK’s economic resilience. 

It’s safe to assume the focus for GBP investors next week will be the BoE’s latest interest rate decision, with the Pound set to firm if the bank drops some hints regarding its tapering plans. 

Euro Undermined by German Political Uncertainty 

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

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

The Euro was placed on the back foot this week, with the single currency falling through the first half of the session in the face of rising uncertainty in Germany ahead of the upcoming general election.  

The Euro then maintained this downward trajectory through the latter half of the week due to the strength of the US Dollar. 

The publication of the Eurozone’s latest PMI figures will likely act as the main catalyst for the Euro next week, with EUR exchange rates potentially being dented if activity in the bloc’s private sector continued to slow this month. 

US Dollar Rebounds from Soft Inflation Reading 

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

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

Trade in the US Dollar has been volatile over the past week, following the publication of the US consumer price index, which revealed the first slowing of domestic inflation in 10 months.  

While the CPI release initially sent USD exchange rates reeling, the ‘Greenback’ quickly picked itself back up amidst a prevailing risk-off mood and a stronger-than-expected US retail sales release. 

Top of the agenda next week will undoubtedly be the Fed’s interest rate decision, with USD investors eager to see if the US bank is ready to announce when it will begin tapering its stimulus programme. Expect the US Dollar to tumble if the Fed remains tight lipped. 

Australian Dollar Dented by RBA Lowe’s Dovish Comments 

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

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

The Australian Dollar got off to a poor start this week, following comments from Reserve Bank of Australia (RBA) Governor Philip Lowe, who quashed hopes that interest rates could rise before 2024.  

The ‘Aussie’ then remained under pressure through the latter half of the week, after Australia’s latest jobs report revealed a sharp drop off in employment last month. 

The publication of the minutes from the RBA’s latest policy meeting could see the Australian Dollar extend its losses into next week’s session should they reinforce the RBA’s dovish stance. 

Key Data  

Sep 21 AUD RBA Minutes 

Sep 22 EUR Consumer Confidence (Sep) 

Sep 22 USD Fed Interest Rate Decision  

Sep 23 AUD Manufacturing PMI (Sep) 

Sep 23 AUD Services PMI (Sep) 

Sep 23 EUR Manufacturing PMI (Sep) 

Sep 23 EUR Services PMI (Sep) 

Sep 23 GBP Manufacturing PMI (Sep) 

Sep 23 GBP Services PMI (Sep) 

Sep 23 GBP BoE Interest Rate Decision 

Sep 23 USD Manufacturing PMI (Sep) 

Sep 23 USD Services PMI (Sep)