Weekly Currency News: The U.S. dollar remains strong
The dollar remains trading near 2-month highs despite a weaker than expected Non-Farm payrolls report on Friday, with the focus moving again towards the Korean Peninsula as Pyongyang seems to be preparing another missile test.
The pound experienced the sharpest depreciation in about a year, as concerns about the UK economic slowdown and the uncertainty regarding the Brexit were heightened by increasing speculation of the weakness of Theresa May as British Prime minister, after her unfortunate speech at the UK Conservative party’s conference.
This week we will have some relevant events in the calendar, starting with the minutes of the last Fed monetary policy meeting, the U.S. CPI figures, ECB Draghi’s speech or the UK manufacturing and Industrial production data.
Currencies last week
- EUR/USD reaches prices below 1.1700
- GBP/USD slumps below 1.3100
- EUR/GBP: on recovery, approaches 0.9000
- USD/JPY upside limited below 113.25
Main events this week:
On Wednesday, all, eyes will be on the FOMC minutes, which will be monitored with particular interest to assess the possibilities of a December rate hike. The U.S. economy has been showing signs of solid growth, this event is expected to be neutral or positive for the dollar.
On Friday we will be attentive to the U.S retail sales and to the Consumer Prices Index figures. Inflation is expected to have ticked up to 2.0% which will pave the path for a Fed rate hike and, in that sense, it might increase buying pressure on the dollar.
In the Eurozone calendar, Thursday will be the most interesting day. In the European morning, we will have the release of the Eurozone Industrial Production, which is expected to extend its buoyant performance. This event might have a moderate impact on the euro.
Later on Thursday, we will be attentive to ECB president Mario Draghi’s speech. With the bank about to disclose its plans taper the QE program, Draghi’s comments about ECB’s monetary policy or the economic outlook of the euro area might have some impact on the common currency.
In the UK calendar, on Tuesday, National Statistics will release the UK trade balance and manufacturing production data. The pound has been extremely sensitive to the negative indicators seen last week, thus any more bad news for UK economy might lead to further GBP depreciation.
The Japanese calendar opens on Tuesday with the Eco Watchers survey, a research analyzing the current economic situation and the short-term economic trends, which might have a moderate impact on the yen.
Later on Tuesday, the Cabinet Office will release the Japanese Machinery orders, a leading indicator of business capital spending and business confidence. Strong machinery orders tend to have a positive impact on the yen and vice versa.