The US Dollar traded in a wide range this week as two separate jobs reports offered a conflicting outlook for the US labour market
Meanwhile, the Pound was able to catch bids this week after a positive revision to UK private sector growth in September.
Pound Supported by Upwardly Revised PMIs
GBP/EUR – Unchanged on the week’s opening levels
GBP/USD – Unchanged on the week’s opening levels
The Pound drifted broadly higher this week, as upwardly revised manufacturing and services PMIs helped to paint a less pessimistic picture of the UK’s economy.
Sterling was also supported latter in the session by comments from Bank of England (BoE) Deputy Governor Ben Broadbent, who suggested another interest rate hike cannot be ruled out.
GBP data is thin on the ground again next week, with the UK’s latest GDP figures the only release of note. If economic growth contracted again in August, Sterling is likely to slump.
Euro Knocked by Underwhelming German Data
EUR/GBP – Unchanged on the week’s opening levels
EUR/USD – Down one cent on the week’s opening levels
The Euro got off to a poor start this week as the single currency was undermined by its negative correlation with the US Dollar.
EUR exchanges began to recover in the middle of the week, but this proved to be short-lived after lacklustre German trade figures stoked fears of a recession in the Eurozone’s largest economy.
Looking ahead, Germany’s finalised consumer price index could drag on the Euro next week if it confirms inflation in the Eurozone’s largest economy fell sharply last month.
US Dollar Volatile amid Mixed Jobs Data
USD/GBP – Up one cent on the week’s opening levels
USD/EUR – Up one cent on the week’s opening levels
The US Dollar soared at the start of this week, climbing to new multi-month highs as a bond selloff rattled markets as saw skittish investors favour the safe-haven currency.
USD exchange rates came crashing back to earth midweek, following an abysmal ADP employment report. Before the publication of the latest US non farm payroll figures revived USD demand as they smashed expectations
Next week will see the publication of the latest US consumer price index. If the CPI figures report domestic inflation crept higher again in September, it may bolster Federal Reserve rate hike bets and lift the US dollar.
Australian Dollar Slumps as RBA Leaves Rates on Hold
AUD/GBP – Unchanged on the week’s opening levels
AUD/USD – Down one cent on the week’s opening levels
The Australian Dollar was met by heavy selling pressure this week, after the Reserve Bank of Australia (RBA) opted to leave interest rates on hold for fourth consecutive month.
AUD exchange rates then languished through the latter half of the week, despite upbeat domestic trade figures and an improving market mood.
Australia’s latest consumer and business confidence figures could drag on the ‘Aussie’ at the start of next week if they report sentiment continues to decline.
Key Data
Oct 9 EUR German Industrial Production (Aug)
Oct 10 AUD Consumer Confidence (Oct)
Oct 10 AUD Business Confidence (Oct)
Oct 11 EUR German Inflation Rate (Sep)
Oct 11 USD PPI (Sep)
Oct 11 USD FOMC Minutes
Oct 12 GDP (Aug)
Oct 12 USD Inflation Rate (Sep)
Oct 13 EUR Industrial Production (Aug)