Pound (GBP)
After rallying on the back of the Bank of England’s (BoE) hawkish forward guidance last week, the Pound (GBP) could face some headwinds on Wednesday, with the publication of the UK’s consumer price index. If inflation cooled more than expected in November it may still stoke interest rate cut speculation and sap Sterling sentiment. Although an upbeat retail sales reading at the end of the week could help temper any losses.
Euro (EUR)
Weaker-than-expected German business sentiment doesn’t appear to have negatively impacted the Euro (EUR) at the start of this week. Looking ahead, with Eurozone data in short supply this week, the single currency could struggle to find momentum, although the hawkish tone struck by the European Central Bank (ECB) last week could help to underpin EUR exchange rates.
US Dollar (USD)
The US Dollar (USD) may spend the first half of this week licking its wounds after the bruising it received in the wake of the Federal Reserve’s rate decision last week. While Fed policymakers have started to push back against speculation that a rate cut is imminent, this message could be undermined if the Fed’s preferred indicator for inflation, the core PCE price index, prints below expectations on Friday.
Australian Dollar (AUD)
The publication of the minutes from the Reserve Bank of Australia’s (RBA) latest policy meeting is likely to act as the main catalyst of movement for the Australian Dollar (AUD) this week. If they echo the dovish tone struck in the RBA’s policy statement earlier in the month, then the ‘Aussie’ is likely to fall.
South African Rand (ZAR)
In the absence of any notable domestic data, the South African Rand (ZAR) is likely to remain tied to market risk appetite this week. Will some end-of-year repricing trigger volatility in the emerging market currency?
Canadian Dollar (CAD)
Canda’s latest CPI figures could pull the Canadian Dollar (CAD) lower this week as an expected cooling of inflation would drop it further below the Bank of Canada’s (BoC) forecast that it would hold at around 3.5% until mid-2024, potentially stoking BoC rate cut speculation.
New Zealand Dollar (NZD)
New Zealand’s latest trade data could provide a leg-up to the New Zealand Dollar (NZD) in the first half of this week as November’s figures are expected to report an uptick in export growth. However, any gains could be quickly reversed if a risk-off mood prevails later in the week.