Pound Sterling (GBP)
The Pound has been volatile today, initially declining against the Euro and US Dollar before making a brief recovery against the EU single currency.
The Bank of England (BoE) is responsible for both these movements; in the former case, BoE Governor Mark Carney devalued the Pound by revealing a cautious economic outlook.
More recently, however, fellow BoE member Michael Saunders has restored confidence among GBP traders by seemingly backing a May interest rate hike.
After Mr Carney’s comments, an interest rate hike in the coming month had been written off by some, but Mr Saunders’ remarks effectively reversed trader perceptions.
Looking ahead, the Pound could struggle against its peers in the coming week.
GBP losses are most likely if a government borrowing deficit is reported on 24th April, along with disappointing Q1 GDP estimates on 27th April.
Today has seen the Euro fall against the Pound and the US Dollar, with limited economic data leaving a possible political clash in the spotlight.
French President Emmanuel Macron and German Chancellor Angela Merkel have met to discuss Eurozone economic reform, but there are concerns of differences preventing a deal.
The Euro could face volatility in the week ahead, as a range of high-impact Eurozone data releases are due for release.
The first will be PMI activity estimates out on 23rd April, which are tipped to show monthly slowdowns. If forecasts prove accurate, these preliminary readings could weaken the Euro.
The week’s main Eurozone economic event will be the European Central Bank (ECB) interest rate decision on 26th April.
ECB officials aren’t expected to adjust monetary policy; if it looks like policy tightening could be incoming, however, then the Euro may still appreciate against its peers.
US Dollar (USD)
An optimistic assessment of the US economy from the Federal Reserve has supported the US currency today, leading to gains of at least 0.5% against the Pound and Euro.
Raising hopes that the US central bank could hike interest rates in the near-future, a Fed report has predicted steady growth despite concerns about Chinese tariffs.
The US Dollar could rise further in the coming week if 23rd April’s PMI activity readings show growth for the initial estimates.
Australian Dollar (AUD)
Australian Dollar movement has been negative today, with the AUD declining against the Euro, Pound and US Dollar.
This decline has partly been caused by the US Dollar strengthening, in addition to gloomy forecasts being made for upcoming inflation rate stats.
The expectation is that the rate of price growth will be reported at 2% on 24th April, which only just hits the lower end of the Reserve Bank of Australia (RBA) target range.
AUD traders have been waiting for signs that an RBA interest rate hike is incoming, but lacklustre inflation will put little pressure on RBA policymakers to act.
New Zealand Dollar (NZD)
There has been little high-impact economic data coming out of New Zealand today, which has left the New Zealand Dollar at the mercy of a stronger US Dollar.
The NZD has declined in value recently, owing to the more valuable USD reducing risk sentiment among currency traders.
Looking ahead, the New Zealand Dollar may be affected by 26th April’s ANZ consumer confidence reading, along with the balance of trade figure.
A rising consumer confidence figure could boost demand for the NZD, as could a forecast-beating expansion of the existing trade surplus.
Canadian Dollar (CAD)
Apart from a -0.4% drop against the US Dollar, the Canadian Dollar has traded in a narrow range against the Euro and made a minor gain against the Pound today.
Canadian economic data has been mixed, with higher inflation and rising month-on-month retail sales in February failing to trigger a CAD rally.
This limited movement is likely because inflation didn’t rise from 2.2% to 2.4% as expected, instead showing a smaller increase to 2.3%.
Next week’s most significant CA data will be the budget balance reading for February, due out on 27th April.
If the budget stats show a forecast-matching shift from a surplus to a deficit during the month, the Canadian Dollar could slide against regular peers.
This week the US Dollar was touching three-year highs when valued against a basket of major currencies. The greenback’s traditional role as one of the safe-haven currencies is helped by a domestic economy that is largely immune to the threats of the coronavirus.
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