US Dollar

US Dollar Soars in Bearish Trade, Pound Undermined by Weak Data and Coronavirus Concerns

The US Dollar skyrocketed this week, as souring market sentiment saw investors flock to the safe-haven currency. 

At the same time, the Pound came under some notable pressure this week as a result of some weak data and a worrying rise in domestic coronavirus cases. 

Pound Tumbles on Coronavirus Concerns 

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

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

The Pound fell sharply this week as GBP investors expressed their concerns over the rise in new coronavirus cases in the UK. 

Sterling was also undermined by some underwhelming data, including a sharper-than-expected slowing of inflation last month and a shock contraction in retail sale, dampening the prospects of the Bank of England (BoE) tightening its monetary policy in the near-term. 

Looking ahead to next week’s session, the focus for GBP investors will likely be on the UK’s latest PMI releases. Will a robust expansion in the private sector in August, following the full reopening of the UK economy, help to boost the Pound? 

Euro Side-lined by USD Strength 

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

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

The Euro initially got off to a relatively strong start this week, with some robust GDP and inflation releases, alongside increased optimism over Europe’s coronavirus situation, reflecting well on the single currency. 

However, EUR exchange rates then faltered in the latter half of the week, as a result of the Euro’s strong negative correlation with the US Dollar. 

Top of the agenda for EUR investors next week will be the Eurozone’s latest PMI figures, in which an expected slowing of private sector activity this month could dent the Euro at the start of the session. 

US Dollar Rockets Higher in Gloomy Trade 

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

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

The US Dollar rocketed higher against the majority of its peers this week as a notably gloomy mood -in light of fresh coronavirus uncertainty and geopolitical tensions- saw investors favour the safe-haven currency.  

These gains were further reinforced by the minutes from the Federal Reserve’s latest policy meeting, as they revealed that policymakers have finally begun formal tapering discussions. 

Top of the agenda for USD investors next week will be the Fed’s annual Jackson Hole summit. Will the Fed push the US Dollar even high by offering a clear timeframe for tapering? Or will turn out to be a non-event and undermine USD exchange rates? 

Australian Dollar Plummets in Risk-Off Trade 

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

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

The Australian Dollar suffered an aggressive selloff this week, with investors shunning the risk-sensitive currency as a bearish market mood prevailed.  

This even saw AUD investors shrug off the publication of Australia’s latest employment figures, in spite of July’s release reporting that domestic unemployment fell to a 12-year low.  

In the spotlight for AUD investors next week will be the publication of Australia’s latest retail sales figures, with an expected slowing of sales growth last month potentially denting the appeal of the ‘Aussie’. 

Key Data  

Aug 23 EUR Manufacturing PMI (Aug) 

Aug 23 EUR Services PMI (Aug) 

Aug 23 GBP Manufacturing PMI (Aug) 

Aug 23 GBP Services PMI (Aug) 

Aug 23 EUR Consumer Confidence (Aug) 

Aug 25 USD Durable Goods Orders (Jul) 

Aug 26 USD Jackson Hole Symposium  

Aug 27 AUD Retail Sales (Jul) 

Aug 27 USD PCE Price Index (Jul)