Australian Dollar (AUD) Faces Headwinds over New Covid Variant
The Australian Dollar (AUD) tumbled on Friday as news emerged that a new, highly transmissible Covid variant had been identified in South Africa.
Risk-off headwinds gripped the market, with investors flocking to safe-haven currencies. October’s retail data failed to boost the ‘Aussie’, despite a 4.9% rise in October’s sales.
A lack of significant AU data means the ‘Aussie’ will likely remain driven by risk dynamics at the start of this week, potentially leading to more pressure if Covid headlines continue to dominate.
Pound (GBP) Supported Against Higher-Risk Currencies
The Pound (GBP) managed to climb against several peers at the end of last week, despite a lack of significant data.
Sterling gained against perceived riskier assets as traders sought safe investments amidst Covid uncertainty. Markets were cautious as, a month ahead of Christmas, there are concerns that the new variant could trigger further restrictions.
Data from the Bank of England (BoE) may influence GBP exchange rates today – Sterling find support if consumer credit climbs as expected.
Euro (EUR) Climbs despite USD Strength
The Euro (EUR) firmed on Friday despite a stronger US Dollar. The strong negative correlation between the currencies often pressures the single currency when USD trends up.
The Euro did not seem particularly affected by a speech from European Central Bank (ECB) President Christine Lagarde. At the second day of a banking conference in Frankfurt, Lagarde discussed the principles of EU law and the necessity of adaptation to changing circumstances.
Into today, German inflation will likely be the main catalyst for EUR movement. A rise to 5% in November may inspire hopes of a more hawkish outlook from the ECB.
US Dollar (USD) Buoyed Safe-Haven Status
The US Dollar benefitted from its safe-haven status at the end of last week as Covid concerns caused chaos.
The ‘Greenback’ traded flat the day previous on a US public holiday – on Friday, investors digested the week’s data, with some economists concerned that the hawkish policy stance of the Federal Reserve – as apparent from the FOMC meeting minutes – may be over-eager.
Today, the Dallas Fed Manufacturing Index may lend support to the US Dollar if activity has increased in November as expected.
Canadian Dollar (CAD) Dented by Oil Price Drop
The Canadian Dollar (CAD) fell on Friday alongside WTI oil prices, amid fears demand could weaken. The discovery of a new Covid variant implies that global economies could slow if new restrictions are imposed.
Canadian current account data could influence the ‘Loonie’ today, with an increase in surplus likely to lend CAD tailwinds.
New Zealand Dollar (NZD) Trades Mixed Following Interest Rate Hike
The New Zealand Dollar (NZD) traded down overall at the end of the week as risk aversion capped gains.
Significant losses were avoided as investors digested the Reserve Bank of New Zealand (RBNZ)’s recent interest rate hike.
Data Releases
Nov 29th 19:30 GBP BoE Consumer Credit (Oct) £0.4B
Nov 29th 20:00 EUR Eurozone Consumer Confidence Final (Nov) -6.8
Nov 29th 20:00 EUR Eurozone Economic Sentiment (Nov) 117.5
Nov 29th 23:00 EUR German Inflation Rate Prelim (Nov) 5%
Nov 29th 23:30 CAD Current Account Q3 C$5.2B
Nov 29th 23:30 CAD PPI Final (Oct) 1.3%
Nov 30th 01:30 USD Dallas Fed Manufacturing Index (Nov) 25
Nov 30th 06:05 USD Fed Powell Speech N/A