Welcome to the Angloinfo weekly currency round-up from CurrencyUK. We aim to answer the big questions you may have regarding the world of currency without all the jargon. Each week we’ll be summarising the week gone by, as well as highlighting some things to look out for in the coming week.
Last week, the Pound received support early on following positive UK employment figures and talk of reaching a Brexit transition deal at the EU Leaders’ Summit on March 22-23. This was short-lived, however, as overall Brexit uncertainty weighed the Pound down despite a generally positive meeting between Theresa May and EU Brexit coordinator Guy Verhofstadt. Brexit woes weakened the Pound so much that it reached its weakest level against the Euro in three months. There were, however, glimmers of hope that a Brexit trade deal could be reached as soon as October which kept the Pound from falling too far.
The US has been in the headlines more than usual this week, and the big headline has been trade tariffs and the threat of a global trade war caused by them. President Trump ignored his advisors and many world leaders, causing one of his most senior officials Gary Cohn to resign, and signed off on the tariffs on steel and aluminium imports. There are fears in the international community that this decision could result in a global trade war. This caused the Dollar to weaken during the middle of the weak, but the Dollar bounced back somewhat as the weak ended due to positive Nonfarm payroll figures and employment data, both of which came in higher than expected. Another unusual headline, even by Trump’s standards, was that he and the North Korean leader Kim Jong-un have agreed to meet each other. Your guess is as good as ours as to what the outcome of that meeting could be.
There were two major events that dominated European financial headlines last week. One was the result of the Italian election and the other was the European Central Bank (ECB) meeting. The Italian election resulted in a hung parliament, which is fairly unsurprising in Europe, but this caused mild unrest in the currency markets temporarily at the start of the week, but the impact on the Euro was minimal. The ECB meeting had a larger impact. Initially, the official statement caused the Euro to spike, especially against the Dollar, but ECB President Draghi’s comments afterwards caused the Euro to slump.
In contrast with the rather busy/newsworthy week we’ve had, looking forward, it’s a rather quiet one ahead with the exception of Tuesday, which sees significant events from across the world. We start in the UK where the budget report will be released, before moving across the pond to the US where consumer pricing data will be announced. This is followed by a speech by Bank of Canada governor Stephen Poloz. The day ends in Japan where the minutes of the Bank of Japan’s latest monetary policy meeting will be released. It’s a busy day for some major currencies across the world, so if you’re dealing with Pounds, US Dollars, Canadian Dollars, or Japanese Yen, Tuesday is a key day for you to be mindful of.
On Wednesday, German pricing data is due to be released, and due to Germany’s pivotal role in the Eurozone, this data could have an effect on the strength of the Euro. We also see retail data coming out in the US, so, especially if you’re dealing with both Euros and Dollars, Wednesday could be a big day for you and your finances.
On Thursday we’re in Switzerland for the Swiss National Bank’s interest rate decision. It’s unlikely that they will opt to change the interest rate, but we don’t have a crystal ball so anything could happen.
Finally, we end the week in Europe where consumer pricing data is due to be released on Friday. As we’ve said, it’s not a particularly eventful week, but there is still scope for movements in exchange rates, as always.
If you are planning any transactions next week, these are events that you will want to consider. Contact CurrencyUK for more information.