The US Dollar enjoyed strong support this week, with the currency benefitting from significant safe-haven flows as coronavirus fears swept through markets.
At the same time, the Euro fell to a one-month low this week as the announcement of new lockdown measures in France and Germany dragged on EUR sentiment.
Pound Supported by Cautious Brexit Optimism
GBP/EUR – Up one cent on the week’s opening levels
GBP/USD – Down one cent on the week’s opening levels
The Pound found some support this week on the back of rising hopes for a UK-EU Brexit trade deal, as the extension of negotiations over the weekend was viewed positively by GBP investors.
However, tempering these gains somewhat were concerns that a spike in UK coronavirus related deaths could force the government to impose a second national lockdown.
In focus for GBP investors next week will be the Bank of England’s (BoE) latest rate decision. Will increasing the size of its quantitative easing programme help to boost the Pound?
Euro Mauled as France and Germany Impose New Lockdowns
EUR/GBP – Down one pence on the week’s opening levels
EUR/USD – Down two cents on the week’s opening levels
The Euro found itself on the back foot this week, being driven lower by record coronavirus surges in Germany and France, which resulted in the bloc’s two largest economies reintroducing lockdown measures.
The European Central Bank (ECB) then kept the pressure on the single currency as it warned of downside risks to the Eurozone and hinted it may take action in December.
With more European lockdowns on the horizon it’s likely the Euro may struggle to attract investors next week, particularly if Germany’s latest industrial figures indicate the country’s vital manufacturing sector is slowing.
US Dollar Rallies amidst Widespread Market Gloom
USD/GBP – Up one pence on the week’s opening levels
USD/EUR – Up one cent on the week’s opening levels
The US Dollar was back in demand this week, with investors flocking to the safe-haven currency following a sharp sell-off in equity markets amidst heightened coronavirus and US political uncertainty.
Further supporting the ‘Greenback’ was the latest US GDP report as economic growth saw a record jump in the third quarter.
Looking ahead, it’s set to be a busy week for USD investors, with the US election, a Federal Reserve rate decision and US payroll report all on the agenda. The election will be the highlight, with a drawn out results process and the uncertainty this would bring likely propelling the US Dollar even higher.
Australian Dollar Slumps in Risk-Off Trade
AUD/GBP – Unchanged on the week’s opening levels
AUD/USD – Down one cent on the week’s opening levels
The Australian Dollar fell back this week, with appetite for the risk-sensitive currency plummeting amidst the sharp souring of market sentiment. This gloomy mood quashed gains from the positive third quarter inflation reading.
Turning to next week, the focus for AUD investors will undoubtedly be on the Reserve Bank of Australia’s (RBA) latest policy meeting, in which the bank is widely expected to slash interest rates to a new record low of 0.1%.
Nov 3 AUD RBA Rate Decision
Nov 3 USD US Presidential Election
Nov 4 GBP Services PMI (Oct)
Nov 5 AUD Trade Balance (Sep)
Nov 5 EUR German Factory Orders (Sep)
Nov 5 GBP Construction PMI (Oct)
Nov 5 EUR Retail Sales (Sep)
Nov 5 GBP BoE Rate Decision
Nov 5 USD Fed Rate Decision
Nov 6 USD Non-Farm Payrolls (Oct)
Nov 6 EUR German Industrial Production (Sep)