By Jonathan Lloyd
Volatility remained high in currency markets last week with data releases, political tensions and geo-political events playing a part.
Data out of the UK highlighted the fickleness of markets, with slightly disappointing wage data leading to a drop in the Pound on Tuesday, followed by a relatively swift rebound through Thursday after a minor improvement to monthly GDP figures against estimates.
The political landscape in France seems to be slightly more stable, although any collapse in negotiations could see the Euro come under further pressure. And the common currency’s position wasn’t helped by ECB President Lagarde, who suggested that a further rate cut in the Eurozone was more likely than a hike.
Across the pond, the US Dollar gained against its G3 counterparts during the week, even with Fed Chair Jerome Powell hinting at a rate cut this month. However it was Donald Trump and his peace deal that dominated most global headlines and news space. For now the ceasefire seems to be holding, with Trump setting his sights back onto Russia and Ukraine as we head towards the end of the calendar year.
The first part of this week is quiet for G3 data, before we receive UK Inflation figures early on Wednesday. These are not to be ignored, as inflation and interest rates continue to drive currency markets. Friday’s UK Retail Sales, along with S&P PMI data will be important for market movement, as will Eurozone HCOB PMIs and US CPI (inflation) and S&P data, also released on Friday.
With the Autumn budget approaching, it is a great time to speak with a currency expert to plan how to mitigate risk in currency markets.