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Weekly Update: US Dollar Rebounds from Two Year Low on Positive Data, Euro Dented by Poor Data and ECB Concerns

The US Dollar briefly touched a new two-year low this week, before rebounding on the back of some positive data releases.

At the same time, the Euro was under pressure through the session in response to some dismal data releases, and reports the European Central Bank (ECB) is concerned by EUR exchange rates.

 

Pound Sterling Dented by Dovish BoE and Brexit Uncertainty

 

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

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

 

The Pound shot higher at the start of the week, before giving ground following some dovish commentary from the Bank of England (BoE), with policymakers warning of lasting economic scars from the coronavirus.

Also dragging on Sterling this week were fresh Brexit jitters, after the UK government stuck a more pessimistic tone regarding the chances of a trade deal with the EU.

Top of the agenda for GBP investors next week is likely to be the latest round of Brexit negotiations between the UK and EU. This will likely apply some downward pressure to Sterling if progress remains limited.

 

Euro Retreats on Abysmal Data and ECB Concerns

 

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

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

 

The Euro dived this week, initially retreating in response to a slew of disappointing EUR data releases, particularly the Eurozone’s latest CPI figures as they revealed the bloc slipped into deflation last month.

Adding to the pressure on the single currency were reports that the European Central Bank (ECB) has begun to raise concerns over the strength of the Euro and how it may hinder the Eurozone’s recovery.

Turning to next week’s session the spotlight for EUR investors will be on the European Central Bank’s (ECB) September policy meeting, where a likely revision to the bank’s inflation forecasts could weigh on the Euro.

 

US Dollar Rebounds from Two-Year Low

 

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

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

 

After briefly touching a fresh two-year low, the US Dollar mounted a convincing recovery this week.

This came as investors turned bullish on USD on the back of some robust economic data as well as a sharp selloff in the equity market which saw investors favour the safe-haven currency.

Coming up next week, the publication of the latest US CPI figures could provide a boost to the US Dollar if domestic inflation is shown to have accelerated again in August.

 

Australian Dollar Retreats as Country Slips into Recession

 

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

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

 

The Australian Dollar struck lower over the past week, undermined by Australia’s latest GDP release as a larger-than-expected contraction of growth in the second quarter confirmed the country slipped into its first recession in nearly 30 years.

Looking ahead, the ‘Aussie’ could face additional pressure through next week’s session if business and consumer confidence is shown to have deteriorated in recent weeks.

 

Key Data

Sep 7 EUR German Industrial Production (Jul)

Sep 7 GBP Brexit Talks

Sep 8 AUD Business Sentiment (Aug)

Sep 8 EUR GDP (Q2)

Sep 9 AUD Consumer Confidence (Sep)

Sep 9 USD JOLTs Job Openings (Jul)

Sep 10 USD Initial Jobless Claims (5/SEP)

Sep 10 EUR ECB Rate Decision

Sep 11 GBP GDP (Jul)

Sep 11 USD Inflation Rate (Aug)

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