US Dollar Tumbles as Powell Remains Coy on Tapering Timeline

Pound (GBP) Muted on Economic Fears 

The Pound (GBP) remained side-lined at the end of last week’s session as rising coronavirus cases and concerns over the UK’s supply chain continued to depress Sterling sentiment. 

GBP exchange rates then extend this trend into Monday as the bank holiday weekend resulted in thin trading conditions in the Pound. 

Looking ahead, the Pound is likely to struggle to build any momentum this week amidst the absence of any notable data releases and ongoing coronavirus concerns. 

Euro (EUR) Buoyed by USD Weakness 

The Euro (EUR) closed last week’s session on a high, as the single currency’s negative correlation with the US Dollar propelled it higher as the latter weakened. 

Data showing that German inflation continued to accelerate this month, helped the Euro to maintain its upward trajectory at the start of this week. 

Looking ahead, EUR investors will be eager to see if this is reflected in the Eurozone’s consumer price index, as a strong inflation reading may put some pressure on the European Central Bank (ECB) to rethink its current dovish bias. 

US Dollar (USD) Sinks on Powell Tapering Speech 

The US Dollar (USD) retreated on Friday, following Federal Reserve Chair, Jerome Powell’s speech at the Jackson Hole Symposium. 

While Powell said that it may be appropriate for the Fed to start tapering this year, he gave not firm timetable for when this would begin, much to the disappointment of USD investors. 

Turning to this week’s session, the impending release of the latest ISM manufacturing PMI will be the focus for USD investors, with any expected slowing of growth in the factory sector potentially denting the US Dollar. 

Canadian Dollar (CAD) Muted despite Rising Oil Prices 

The Canadian Dollar (CAD) struggled to attract much support on Friday, in spite of a fairly robust uptick in oil prices. 

Coming up this afternoon, Canada will publish its latest GDP figures. Will a slowing of growth in the second quarter limit the appeal of the ‘Loonie’ today? 

Australian Dollar (AUD) Firms in USD Pullback 

After rallying on Friday, the Australian Dollar (AUD) has maintained an upward trajectory at the start of this week’s session, as a weaker US Dollar has helped to buoy market risk appetite. 

However, the ‘Aussie’ could face some headwinds later tonight, as Australia’s latest GDP figures are expected to report a slowing of domestic growth in the second quarter. 

New Zealand Dollar (NZD) Rallies in Risk-On Trade 

The New Zealand Dollar (NZD) has also enjoyed support through the end of last week and into this week as the prevailing risk-on trade reflects well on the ‘Kiwi’.