US Dollar

US Dollar Firms as Risk-Off Mood Prevails, Euro Stumbles on Dovish ECB Comments

The US Dollar maintained an upward trajectory this week, as skittish investors continued to favour the safe-haven currency. 

At the same time, the Euro struggled to attract support this week in the wake of some dovish comments by European Central Bank (ECB) President Christine Lagarde. 

Pound Fluctuates amidst Mixed Data Release 

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

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

The Pound got off to a poor start this week, as elevated coronavirus cases raised questions over the sustainability of the government’s plans to lift nearly all restrictions in England. 

Sterling then fluctuated in the second half of the week, amidst some mixed data releases and hawkish comments from a Bank of England (BoE) policymaker. 

The unlocking of the final parts of the UK economy may help to underpin GBP exchange rates next week, with some robust PMI releases also potentially extending some support. 

Euro Undermined by Dovish ECB Comments 

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

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

The Euro fell sharply through the first half of this week, with the EUR/USD exchange rate striking a new three-month low in response to dovish comments from the ECB’s Christine Lagarde.  

While the Euro attempted a recovery in the middle of the week amidst a pullback in the US Dollar, but this proved short-lived in the face of concerns over rising coronavirus cases in Europe. 

The ECB’s latest rate decision will no doubt be the focus for EUR investors next week, particularly in light of Lagarde’s recent hints that the bank may alter its forward guidance and extend its bond buying programme, following the changes to its inflation targets. 

US Dollar Bolstered by Souring Market Mood 

USD/GBP – Up one pence on the week’s opening levels  

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

The US Dollar enjoyed strong support through the first half of this week, with USD exchange rates surging in response to a stronger-than-expected US CPI release in June, which reported US inflation surged to 5.4%.  

The US Dollar face some headwinds in mid-week trade on the back of some dovish comments from Federal Reserve Chair Jerome Powell, but quickly rebounded again through the latter half of the week amidst a prevailing risk-off mood. 

In the absence of any other high-impact data releases, the latest Markit PMIs could provide some direction to the US Dollar next week, with another robust expansion of the US private sector likely to reflect well on USD exchange rates. 

Australian Dollar Rocked by Fluctuating Risk Appetite 

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

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

The Australian Dollar traded in a wide range over the past week, with a mixed market mood infusing some volatility into the risk-sensitive currency.  

One positive spot was Australia’s latest jobs report, which showed domestic unemployment drop to a decade low in June, although this was unable to sustain a rebound in the ‘Aussie’. 

Turning to next week’s session, the publication of Australia’s latest retail sales figures will likely be the primary focus for AUD investors, with the ‘Aussie’ potentially weakening if sales growth continued to soften last month. 

Key Data  

Jul 20 AUD RBA Minutes 

Jul 21 AUD Retail Sales (Jun)  

Jul 22 GBP CBI Industrial Trends Orders (Jul)  

Jul 22 EUR ECB Interest Rate Decision 

Jul 22 USD Initial Jobless Claims (17/Jul)  

Jul 23 AUD Services PMI (Jul) 

Jul 23 EUR Manufacturing PMI (Jul) 

Jul 23 GBP Manufacturing PMI (Jul) 

Jul 23 GBP Services PMI (Jul)  

Jul 23 EUR Services PMI (Jul) 

Jul 23 USD Manufacturing PMI (Jul) 

Jul 23 USD Services PMI (Jul)