Movement in the currency market remained highly volatile last week amid conflicting signals surrounding a potential US-Iran peace agreement, the uncertainty surrounding which is likely to continue to influence trends this week.
Last week's key rate movements
- GBP/EUR – Down 0.3% on the week
- GBP/USD – Unchanged on the week
- EUR/USD – Up 0.4% on the week
- AUD/USD – Up 0.7% on the week
Pound (GBP)
Barring a revision to service sector growth in May’s finalised PMIs, impactful UK economic releases are in short supply this week, likely leaving movement in the pound (GBP) to be dictated by wider market trends.
Euro (EUR)
The publication of the Eurozone’s consumer price index will act as the primary catalyst for the euro (EUR) this week, with another rise in inflation poised to reinforce hawkish European Central Bank (ECB) monetary policy bets and lift EUR exchange rates.
US dollar (USD)
In addition to potential developments in the Middle East, several high-impact US data releases will influence the US dollar (USD) this week. The highlight is likely to be the latest US non farm payroll print, with the 'greenback’ likely to firm if the US labour market continues to show resilience.
Australian dollar (AUD)
This week sees the publication of Australia’s latest GDP figures. An expected deceleration of growth in the first quarter could apply pressure to the Australian dollar (AUD), as the slowdown is likely to further temper Reserve Bank of Australia (RBA) interest rate expectations.
South African rand (ZAR)
The South African rand (ZAR) is likely to be primarily driven by market risk dynamics this week in the absence of any notable domestic data. This could see the uncertainty over the Middle East peace process infuse volatility into the currency throughout the session.
Canadian dollar (CAD)
The Canadian dollar (CAD) is likely to face resistance later this week if Canada’s latest jobs report points to growing slack in the labour market.
New Zealand dollar (NZD)
In the absence of any domestic data of note, movement in the New Zealand dollar (NZD) is likely to be tied to market risk dynamics and Reserve Bank of New Zealand (RBNZ) rate hike speculation.
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