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Currencies included: USD, EUR, GBP, ZAR, AUD and NZD

 

Data releases and relevant current affairs for the week

Currency movement forecasts, market analysis and expected data release results

Important events and predicted effects on currencies

 

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Market predictions and forex forecasts for the week of 4 July 2022.

weekly market predictions for the week ahead

Week starting 04-07-2022

 
 

We have excluded the Russian Ruble from the analysis in our report due to the extreme volatility associated with the currency.

 

USD

  • The US Dollar had another great week, with the currency strengthening against all but two of the top 19 currencies we monitor. The largest gains were against the ZAR (3.12%) and the Swedish Krona (SEK) (2.41%), with the losses against the Japanese Yen (JPY) (-0.12%) and the Chinese Yuan (CNY) (-0.02%).

  • For US data, US GDP growth contracted on a basis by 1.6% (QoQ), which is larger than anticipated and raises alarm for the possibility of the US economy slipping into recession. Another event last week was the market reacting to the US Fed President commenting that he believes that the Fed could orchestrate a “soft landing” and keep the US economy from plunging into recession.

  • This week starts off slow, with the Independence Day holiday in the US, which should take a lot of liquidity out of the markets. After which, the FOMC minutes will be released on Wednesday, followed by the ADP employment figures on Thursday, and the anticipated nonfarm payrolls data on Friday. The latter will be a major point to watch and will, without any doubt, result in some major volatility in the market.

EUR

  • A mixed performance from the Euro, with the single currency strengthening against 11 of the top 19 currencies we monitor. The largest gains were against the ZAR (1.61%) and the SEK (0.96%), whilst the most notable losses were against the JPY (-1.59 %) and the CNY (-1.42%).
  • The EUR has performed well for a few weeks, so it was expected that it would be sold off slightly, especially with the backdrop of further escalations in the Ukrainian conflict, as Russia sends less natural gas to Europe. This “economic war” on Europe is bound to have impacts on the most reliant countries such as Germany and the Netherlands. For last week’s data, EU inflation hit new multi-year highs, with year-on-year inflation hitting 8.6%.
  • This week, the EU retail sales data will be released on Wednesday and is expected to show a drop on a month-on-month basis, which is concerning, especially with the global issue of a possible recession on the horizon.

GBP

  • The British Pound had a mixed week, like the Euro, with the currency strengthening against 11 of the top 19 currencies we monitor. The Pound’s most notable upside movements were against the ZAR (1.69%) and the SEK (1.04%), whilst the greatest downside movements were against the CNY (-1.52%) and the JPY (-1.46%).
  • For UK data, the GDP growth remained positive on a quarter-on-quarter basis, which gives the Bank of England (BoE) some credibility in the way it reacted to increased inflation and did not overburden the economy with big jumps in interest rates.
  • This week, there will be minimal UK data. The most notable events would be the speeches by various BoE members. Apart from that, the GBP will be influenced by global developments.

ZAR

  • The South African Rand had a terrible trading week, with the currency weakening across the board. The most notable weaknesses were against the CNY (-3.24%) and the JPY (-3.17%), with the smallest drop against the SEK (-0.73%).
  • The ZAR has had another breakdown after Eskom plunged the country into darkness with stage 6 loadshedding. The market took this as a prime opportunity to sell the ZAR. With blackouts of over four hours occurring on most days, it is not surprising that market participants saw this as a major blow to the economic recovery of the country.
  • There will be no noteworthy data from South Africa this week. The market will be only interested in the economic impacts of this loadshedding and how fast it can be reduced to fend off further economic pressures on the economy.

AUD

  • The Australian Dollar had a mixed performance and weakened against 10 of the top 19 currencies we monitor. The AUD strengthened most notably against the ZAR (1.56%) and the SEK (0.90%), whilst the currency weakened most significantly against the CNY (-1.73%) and the Canadian Dollar (CAD) (-1.33%).
  • The main event from Australia last week was a surprise upbeat on the month-on-month retail sales data, which came in at 0.9%, instead of the 0.4% anticipated.
  • The main event coming up this week is the RBA interest rate decision on Tuesday, where it is expected to raise rates by 50 basis points to 1.35%.

NZD

  • The New Zealand Dollar also had a mixed week and strengthened against 10 of the top 19 currencies we monitor. The most notable gains were against the ZAR (1.59%) and the SEK (1.03%), and the most impactful losses were against the CNY (-1.63%) and the CAD (-1.28%).
  • One of the main events the past week has been a free trade agreement signed between New Zealand and the Eurozone. This should smooth trade relations between the two and add to New Zealand’s dairy exports to the EU.
  • The main event this week is the business confidence for Q2. This is expected to be less negative than for the previous quarter, so that should be seen as positive compared to the global economy.

If you would like further information on the market along with personalised hedging strategies for you or your business, you can get in touch with our team at fxhedging@sableinternational.com.

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