USD & AUD gains, what's ahead this week?
EURO is under pressure this afternoon, GBP/EUR pushing up, and EUR/USD declining toward last Thursday’s rate under 1.1100. German economic advisors suggested today that growth in 2020 could hit 0.5%, suggesting the near-recessionary data in 2019 is temporary – this is a much-awaited positive outlook from Germany, but the EUR failed to react strongly.
Weighing on the EUR was this morning’s PPI data (Producer Price Inflation) which fell to -1.2% annualised. This shows that deflationary pressure still exists in Europe, despite the ECB’s best efforts. The new ECB President has her work cut out!
USD: Talk around US-China trade discussions has become positive recently, and the USD is gaining strength again. Volatility is likely as we have ISM data releases and Federal Reserve speeches today.
UK: Today saw good statistics from the Service Sector, with the PMI number reaching 50, with expectations having been at 49.7. Although the report was far from ‘solid’ the expectations improved, with businesses hoping that Brexit uncertainty will be over by early 2020 (according to FXStreet),
Sweden: The central bank met at the end of October, and the market expected rates to rise, which would help a struggling currency. However, the minutes released today showed there were few arguments to raise rates, which means the market is now pricing a 75% chance of a rate hike to 0% in December – after which, the central bank is expected to wait and see.
AUD: The central bank kept rates on hold and the currency pushed higher – the market has decreased expectations of a December rate hike (most economists now pricing just 50% chance). Positive trade and economic outlook from the central bank pushed AUD higher overnight.
The week ahead:
GBP: Thursday sees the #Super Thursday’ set of data release including inflation, growth forecasts and interest rate decision from the Bank of England.
USD: Friday’s Consumer sentiment will be closely watched as a gauge for the service sector s we approach the Festive season.
CAD: Friday’s employment report will be as anticipated as ever.
EUR: Wednesday and Thursday see plenty of speeches to keep us on our toes.