Busy week ahead Dollar back in the driving seat

16 May, 2016

Tom Arnold

Last week the currency markets were very quiet thanks in main to a lack of critical data and as a result the Pound traded in fairly tight ranges against most of the major currencies. Things did get a bit more volatile towards the end of the week due to the Bank of England releasing their monthly policy statement. The BoE decided against any policy changes, which was widely expected, but in somewhat of a surprise to the markets the MPC voted 9-0 in favour of keeping interest rates the same. There had been some expectations that there might be a couple of votes for an interest rate cut, but with this not being the case the Pound managed to take heart from this stable policy position and made some gains, most notably against the Euro where the Pound touched a 3 week high by the close of the trading week. 

Gains against the Dollar were not realised thanks to good US retail sales figures, which gave the Dollar a significant boost across the board, taking GBPUSD down to it’s lowest trading level for a month. The Dollar also pushed back significantly against the Euro, achieving month lows there too. Could this be a sign of the Dollar taking back the initiative in the market and reasserting it’s dominance? You only have to look back a couple of months to Dollar buying rates being their lowest for 7 years…

The week ahead is much busier than last week with lots of critical data out home and abroad. Here is a summary:

US Housing Market Index

Australian RBA Meeting Minutes
UK CPI + RPI Inflation
UK Producer Price Index
European Trade Balance
US CPI Inflation
US Industrial Production

UK Unemployment Rate
European CPI Inflation
US Fed Meeting Minutes

Australian Unemployment Rate
UK Retail Sales Figures
European ECB Policy Meeting Accounts

German Producer Price Index
European Current Account

With so many important announcements it is likely we will have a much more volatile week on the markets this week and therefore it is essential to stay in close contact with your Currency Index account manager to be kept informed of exactly what is happening and what impact it is likely to have on your upcoming currency purchase.