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Currency Market Review: AUD, GBP, EUR, USD, CAD, NZD in Focus

23 October 2017 by News Desk

If you're interested in how exchange rates are trading this week, take a look at the latest currency report supplied by currency experts FC Exchange.

GBP – UK growth readings ahead

Last week

-Highly influential inflation numbers came in at 3.0% – a five-and-a-half-year high.

-UK wage growth came in at 2.2% in the three months through August, unchanged from the previous reading.

-UK retail sales contracted by -0.8% in the month of September showing high inflation and falling real wages are taking their toll on consumer spending.

-On Thursday Bank of England (BoE) Deputy Governor Jon Cunliffe said that it wasn’t clear that interest rates needed to rise soon. This echoed thoughts from Dave Ramsden on Tuesday when he stated that he wasn’t one of the majority of policymakers that thought rates needed to rise in the months ahead.

-Theresa May and Angela Merkel bolstered sterling with their optimism over Brexit discussions.

Week ahead

One of the biggest events for the pound in the week ahead will be the UK gross domestic product (GDP) reading on Wednesday. Growth is expected to remain at 1.5% on the year in Q3, while forecast to come in at 0.3% on the quarter. If figures come in below these expectations, it’s likely the pound will track lower. Nationwide house price data will follow later in the week. In addition, Lloyds will release its interim management statement on the 25th October, with Barclays following suit releasing their own on the 26th. Any news in Brexit progress could also create GBP movement, so markets will be closely watching any meetings between the EU and UK.

EUR – Markets eye looming ECB press conference

Last week

-Eurozone ZEW economic sentiment survey dropped from 31.7 to 26.7 in October.

-European Central Bank (ECB) President Mario Draghi announced that loose monetary policy allows governments to implement reforms to spur growth.

-Catalonia crisis intensified as Madrid looked set to activate Article 155 to remove the territory’s autonomy.

Week ahead

There are a few pieces of economic data that could sway the single currency in the week ahead, such as Monday’s Eurozone consumer confidence and Tuesday’s German and Eurozone manufacturing, services, and composite purchasing managers’ indexes (PMI’s). However, perhaps one of the biggest influences of the week will be Tuesday’s European Central Bank lending survey which is due to hit the markets. Thursday will continue with more ECB developments when the central bank announces its latest monetary policy decisions concluding with a press conference where ECB Chief Mario Draghi will speak. Draghi could impact how the EUR trades, as his comments have been influential in the past.

USD – Trump’s tax reforms get one step closer

Last week

-US Federal Reserve Chair Janet Yellen warned that there was an ‘uncomfortably high’ risk that the central bank will have to deploy crisis-era stimulus tools again.

-US President Trump considered more hawkish candidates for the role of Fed Chief.

-Tax reform developments supported the US dollar after the Senate voted 51 to 49 to push through the budget proposal making way for Trump’s tax plans.

Week ahead

There are some exciting data releases ahead this week which may influence the US dollar. While Monday starts off quietly and Tuesday continues with medium-tier US manufacturing, services, and composite PMI’s, Wednesday will see the highly important US durable goods orders released. Economists are expecting the ecostat to come in at 1.0% in September, following the previous 2.0% reading. Meanwhile, Thursday will continue with the US advance goods trade balance coming to light, and Friday will finish the week with highly significant US growth figures, predicted to fall from 3.1% to 2.6% on the year in the third quarter.

NZD – Politics sees Kiwi dollar tank

The New Zealand dollar softened significantly last week after politics took a sharp turn. The New Zealand First party announced that it would be forming a coalition with the Labour party, making Jacinda Ardern the next Prime Minister. In the past three months, Ardern has turned the formerly struggling Labour party around and managed to achieve the top political position of Prime Minister, as well as being the youngest one since 1856 at only 37.

CAD – Canadian consumer prices grow slower than forecast

Last week the Canadian consumer price index showed prices aren’t rising as quickly as economists had hoped. The latest reading marked a rise from 1.4% to 1.6% in September on the year, falling short of the 1.7% forecast. Meanwhile, Canadian retail sales also noted a downturn, contracting by -0.7% in August after July’s +0.2% growth and predictions for a more positive 0.3%.

AUD – Aussie supported by labour market data

The Australian dollar hit a 17-month high versus the New Zealand dollar on the news a new political party would be taking over in the Kiwi nation, as well as enjoying a boost on the back of labour market data. The Australian unemployment rate hit its lowest level in three years at 5.5% in September, down from the previous reading of 5.6%.

Disclaimer: This economic update is provided by FC Exchange a Global Reach Group Company, industry leaders in foreign exchange. Authorised affiliates are permitted to reuse content.

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