It was a busy week for currency traders this week, with the publication of some high-profile data offering investors more insight into the economic damage caused by the coronavirus crisis.
This appeared to weigh on the US Dollar in particular, with the currency suffering from a sizable sell-off in spite of a souring market mood in the latter half of the week.
Pound Sterling Buoyed by the Return of Boris Johnson
GBP/EUR – Unchanged on the week’s opening levels
GBP/USD – Up two cents on the week’s opening levels
The Pound got off to a strong start this week as GBP investors cheered Boris Johnson’s return to Downing Street.
Sterling sentiment was further bolstered by the PM’s coronavirus update, as Johnson claimed the UK had passed the peak of its outbreak and that he would unveil a ‘comprehensive’ plan to exit the lockdown next week.
For GBP investors the government’s exit strategy is likely to be the main focus next week, but expect the Bank of England’s latest rate decision to also influence the Pound.
Euro Fluctates as Eurozone GDP Strikes Record Low
EUR/GBP – Unchanged on the week’s opening levels
EUR/USD – Up one cent on the week’s opening levels
The Euro traded in a wide range this week as the Eurozone’s latest GDP figures revealed the bloc’s economy contracted a whopping 3.8% in the first quarter.
A gloomy outlook from the European Central Bank (ECB) also added to this volatility, offsetting announcements from France and Spain outlining their plans to lift lockdown restrictions in the coming weeks.
Looking ahead, the main catalyst of movement for the Euro next week looks to be the publication of Germany’s latest industrial data. A plunge in factory activity in May could weigh on the single currency.
US Dollar Tumbles on Abysmal Data
USD/GBP – Down one pence on the week’s opening levels
USD/EUR – Down one cent on the week’s opening levels
The US Dollar took a beating this week as some dire data stoked concerns about the state of the US economy, not least the first quarter GDP figures which reported that growth contracted by 4.8% at the start of the year.
The sell-off really picked up pace in the latter half of the week however, when US initial jobless claims revealed that the US economy had shed over 30 million jobs since the start of the coronavirus crisis.
Coming up this week, the publication of the highly influential US payroll figures are likely to take centre stage, potentially sending the US dollar even lower as April’s release is set to show an unprecedented collapse in employment.
Australian Dollar Rallies Despite Market Uncertainty
AUD/GBP – Unchanged on the week’s opening levels
AUD/USD – Up one cent on the week’s opening levels
The Australian Dollar initially started on strong footing this week, buoyed by a positive market mood and stronger-than-expected quarterly inflation figures.
However, this mood soured in the latter half of the week, forcing the ‘Aussie’ to relinquish almost all of its gains.
In the week ahead, the focus will be on the Reserve Bank of Australia’s (RBA) policy decision as AUD investors await the bank’s latest assessment of the economy and how it is faring through the coronavirus crisis.
May 5 AUD RBA Rate Decision
May 5 USD ISM Non-Manufacturing PMI (Apr)
May 6 EUR Retail Sales (Mar)
May 7 EUR German Industrial Production (Mar)
May 7 GBP BoE Rate Decision
May 8 USD Non-Farm Payrolls (Apr)