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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 27 June 2022.

Weekly market predictions for the week of 14 December 2020

Week starting 27-06-2022

 
 

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 dropped in value against 14 of the top 19 currency pairs last week. This drop in the USD is not too surprising, as the currency was extremely strong and it had to take a breather. The Dollar’s most drastic moves to the downside were against the Turkish Lira (TRY) (-4.67%) and the Mexican Peso (MXN) (-2.15%), whilst the largest moves to the upside were against the Brazilian Real (BRL) (0.99%) and the Polish Złoty (PLN) (0.56%).

  • Last week, the market digested the massive rate hike by the US Fed in the previous week. The USD has not moved much aside from the mentioned drop against most of its trading peers. This is in part due to the US Fed Chair Powell’s testimony to Congress around whether the US economy will be able to dodge a recession.

  • This week, there will be minimal US data. The main data points will be durable goods orders on Monday, followed by Powell’s speech on Wednesday. Here, he is expected to give the market some insight on his plans for the US going forward.

EUR

  • The Euro had a generally positive week, with the single market currency gaining ground against 13 of the top 19 currencies. The most notable upside movements were against the BRL (1.53%) and the PLN (1.11%), whilst the largest downside movements were against the TRY (-4.8%) and the MXN (-1.66%).
  • There was no significant data released last week in the Euro Area. There were, however, a multitude of European Central Bank (ECB) members who gave speeches throughout the week, all of them indicating the ECB will be raising rates at their next meeting. This helped strengthen the EUR.
  • The main event this week will be the EUR inflation data, which will be released on Friday. Inflation is expected to increase once again, further supporting the case for the ECB raising interest rates.

GBP

  • The British Pound Sterling had a mixed week, with the currency gaining ground against 10 of the top 19 currency pairs. The currency strengthened most significantly against the BRL (1.19%) and the PLN (0.95%), whilst weakening most notably against the TRY (-5.03%) and the MXN (-1.84%).
  • The main data event last week was the UK inflation data, which increased slightly more than anticipated on both a month-on-month and year-on-year basis. This means that the Bank of England might be more aggressive with its interest rate hikes going forward.
  • The main data event this week is the GDP growth rate for Q1. The GDP is expected to increase on a year-on-year basis – we will be watching this closely as, while growth remains robust, we can tolerate higher inflation, but if growth drops, this will be bad for the economy.

ZAR

  • The South African Rand had a stellar week, with the currency gaining ground against 17 of the top 19 currency pairs. The two losses were against the TRY (-2.98%) and the MXN (-0.71%), whilst the largest gains were against the BRL (3.32%) and the PLN (2.11%).
  • In South Africa, the main data point has been the increase in the inflation figures. Year-on-year inflation figures have been above the 3-6% target range set by the SARB and the most recent figure came in at 6.5%. This puts some weight to the rumour that the SARB might be looking to follow the US and raise interest rates by 75 basis points.
  • This week, we look to see if the market takes note of the newly implemented stage 4 loadshedding in the country, that is due to strike action at multiple power stations.

AUD

  • The Australian Dollar had a dismal performance and weakened against 15 of the top 19 currency trading pairs. The most notable moves to the downside were against the TRY (-5.63%) and the MXN (-2.5%), whilst the most impactful upside movements were against the BRL (1.94%) and the PLN (0.26%).
  • The only significant data from Australia last week was the Reserve Bank of Australia’s meeting minutes, which seems to have not supported the AUD.
  • This week, retail sales data will be released on Wednesday and is expected to increase, which is positive for the AUD.

NZD

  • The New Zealand Dollar had a terrible week, weakening against 15 of the top 19 trading pairs. The NZD weakened most notably against the TRY (-5.61%) and the MXN (-2.47%), whilst strengthening most significantly against the BRL (2.24%) and the PLN (0.3%).
  • New Zealand’s consumer confidence dropped drastically last week and was a major contributing factor to the NZD’s weakness.
  • There is no important data from New Zealand this week, so we look to see if the NZD can rebound from last week’s weakness.

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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