By James Caley
Last week was relatively uneventful, with no major surprises for the markets. Both the Federal Reserve and the Bank of England left interest rates unchanged, while stronger than expected Eurozone growth figures provided some support for the Euro. In the US, weaker GDP growth and softer inflation data sent mixed signals, leaving investors with little clarity over the outlook for interest rates.
The economic calendar is noticeably lighter this week, particularly across the UK and Eurozone, meaning there are fewer scheduled events likely to influence exchange rates. That said, with fewer data releases competing for attention, the key announcements that are due could have an even greater impact if they differ from expectations.
The spotlight falls firmly on the US economy. Manufacturing data on Monday, job openings on Tuesday and the latest ISM Services PMI on Wednesday will all provide fresh insight into the health of the world’s largest economy. However, Friday’s US Non-Farm Payrolls report and unemployment figures are likely to be the week’s biggest market mover. Employment data is one of the most closely watched economic releases each month and has a long history of generating significant swings in exchange rates when the results surprise.
Although the economic calendar is relatively light outside of the US, that doesn’t necessarily mean a quiet week for the currency markets. Political developments, trade announcements, central bank commentary and other unexpected headlines can all influence exchange rates at short notice. If you have an international payment to make in the coming days or weeks, it may be worth reviewing your options sooner rather than later rather than leaving your exchange rate to chance.