Euro on back foot after US Dollar boost

Last week was a big week for the US Dollar with a number of key data releases that ultimately drove the market and effected a number of other currencies pairs. After such a strong few months for the USD it was seemingly running out of steam finding key support in the last month against the Euro and US Dollar. Last week was therefore pivotal for the US Dollar after some poor data in the last month that has started to put pressure on the greenback. Overall the US Dollar had a strong week as the Federal Reserve announced the end their bond buying programme and growth came in at 3.5% which was better than expected despite showing a sharp slowdown in growth which is being seen globally. With the US in a slightly better position we have seen ‘safe haven’ move from investors into the USD in these more uncertain times, and out of currencies like the Euro, Australian Dollar and New Zealand Dollar. GBP/USD is now trading back at the best selling rates we have since November last year, or the worst for buyers sending money to the USA!

The weakness in the Euro was the most evident on the markets with EUR/USD dropping 3 cents in as many days whilst GBP/EUR was also able to make some surprise gains despite the pound dropping against nearly all other major currencies last week. The Euro was also under slight pressure on Friday as Core Inflation for came in at just 0.7%, short of the 0.8% forecasts.  GBP/EUR is now trading at the highest levels since the beginning of October and only 1 cent off the best rates since 2008. It is hard to imagine these rates improving much further when you consider these levels have only really been reached due to last week’s US Dollar surge and the pound still remains under pressure between now and year end, particularly whilst nearer these peak rates.

The week ahead sees 3 interest rate decisions and a host of key data for the likes of Sterling, US Dollar, Canadian Dollar, Australian Dollar and New Zealand Dollar. For an overview of the main events to look out for please see below:

Currency News this week

Monday

• 9:30am (GBP) – UK Manufacturing PMI
• 3:00pm (USD) – ISM Manufacturing PMI

Tuesday

• 3:30am (AUD) – RBA interest rate decision
• 9:30am (GBP) – UK Construction PMI
• 9:45pm (NZD) – New Zealand Unemployment rate

Wednesday

• 9:30am (GBP) – UK Services PMI
• 10:00am (EUR) – Retails Sales
• 3:00pm (USD) – ISM Non-Manufacturing PMI

Thursday

• 12:30am (AUD) – Unemployment Rate
• 9:30am (GBP) – UK Industrial & Manufacturing Production
• 12:00pm (GBP) – BoE Interest Rate Decision
• 12:45pm (EUR) – ECB Interest Rate Decision followed by press conference

Friday

• 9:30am (GBP) – UK Goods Trade Balance
• 1:30pm (CAD) – Unemployment Rate
• 1:30pm (USD) – Non-Farm Payrolls / Unemployment Rate