US Dollar

Weekly Update: US Dollar Hit by Shock Selloff Following Dovish Fed, Euro Stumbles on Renewed Coronavirus Concern

The US Dollar faced a major setback this week, plunging in mid-week trade after the Federal Reserve struck a more dovish-than-expected tone following its latest policy meeting.

At the same time, the Euro gave ground this week as the temporary suspension of the AstraZeneca vaccine as well as rising coronavirus cases in many parts of Europe spooked EUR investors.

Pound Fluctuates on Mixed BoE Outlook

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

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

Trade in the Pound was mixed this week in response to the Bank of England’s latest rate decision, as the bank was broadly upbeat in its outlook for the economy but signalled it is still nowhere near ready to start tightening monetary policy.

Infusing further volatility into Sterling throughout the session were vaccine jitters after the NHS warned it is facing a ‘significant shortage’ in April.

It looks to be a busy session for GBP investors next week, amidst a slew of high impact UK data releases, with a key focus likely to be the latest consumer price index as markets look for any evidence that inflationary pressures are starting to build.

Euro Undermined by Vaccine and Third Wave Fears

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

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

The Euro faced an uphill battle this week as the suspension of the AstraZeneca vaccine in many parts of the EU stoked concerns over further delays to the rollout across the continent.

While the jab was eventually given the go ahead by the European Medicines Agency (EMA), the announcement of a new lockdown in Paris and fears that Europe is facing a third wave of coronavirus cases kept the pressure on the single currency.

Turning to next week’s session the focus for EUR investors will likely be on the Eurozone’s latest PMI releases. Will a modest expansion of the bloc’s private sector this month offer some support to the Euro?

US Dollar Dented by Dovish Fed

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

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

The US Dollar faced a significant setback this week, collapsing in response to the more dovish-than-expected tone struck by the Federal Reserve following its latest policy meeting.

However, the ‘Greenback’ was able to avoid closing the week lower as it continued to garner support from rising US Treasury yields and a prevailing risk-off mood.

Looking ahead, the US Dollar could face some headwinds next week with the publication of the latest US durable goods figures, as economists forecast growth in new orders will have slowed again in February.

Australian Dollar Fluctuates amid Mixed Data

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

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

The Australian Dollar opened this week on the defensive, as broad USD strength and vaccine concerns dampened the appeal of the risk-sensitive ‘Aussie’.

The Aussie made a convincing recovery in mid-week trade after Australia’s latest jobs report revealed a sharper-than-expected drop in domestic unemployment last month, but then failed to sustain its best levels following some disappointing retail sales figures.

Coming up next week, the Australian Dollar may receive support from the publication of Australia’s latest PMI figures, assuming they show economic activity continued to grow in March.

Key Data

Mar 23 AUD Manufacturing PMI (Mar)

Mar 23 AUD Services PMI (Mar)

Mar 23 GBP Unemployment Rate (Jan)

Mar 24 GBP Inflation Rate (Feb)

Mar 24 EUR Manufacturing PMI (Mar)

Mar 24 EUR Services PMI (Mar)

Mar 24 GBP Manufacturing PMI (Mar)

Mar 24 GBP Services PMI (Mar)

Mar 24 USD Durable Goods Orders (Feb)

Mar 25 USD GDP (Q4)

Mar 25 USD Initial Jobless Claims (20/Mar)

Mar 26 EUR IFO German Business Climate (Mar)