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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 30 May 2022.

weekly market watch 11 January 2021

Week starting 30-05-2022

 
 

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

 

USD

  • The past week saw major losses from the USD as the currency weakened against 17 of the top 19 trading pairs. The most notable losses were against Norwegian Krone (NOK) (-3.45%) and the Brazilian Real (BRL) (-3.03%). The only two gains were against the Turkish Lira (TRY) (2.2%) and the Chinese Yuan (CNY) (0.09%).

  • The drop in the USD has continued after the rally from previous weeks. This is expected with some profit taking and the general feeling that the Fed will not be hiking rates as aggressively as some might have speculated. For US data, the FOMC minutes were released, and they reiterated the above. The meeting minutes were followed by the GDP growth data for Q1, where the contraction in the growth rate of the country was larger than expected.

  • With Memorial Day celebrated on Monday, there will be a shorter trading week in the US. As a result, we expect less liquidity in the market today, with some larger moves on Tuesday. On Friday, the nonfarm payrolls data will be released, which is expected to slow down slightly, and could add further pressure onto the USD.

EUR

  • The Euro had a good week and strengthened against 14 of the top 19 trading pairs. The largest gains were against the NOK (7.39%) and the TRY (3.64%), whilst the most notable losses were against BRL (-1.27%) and the Polish Złoty (PLN) (-1.14%).
  • European Central Bank (ECB) President, Christine Lagarde, reiterated the fact that the ECB would be raising rates in the next few meetings, with a 50-basis point hike priced in for the July and September meetings, which has supported the EUR.
  • The main event coming up this week is the inflation data on Tuesday. Aligned with the global trend, inflation is expected to increase once again. This is a major event to monitor.

GBP

  • The GBP had a mixed trading week and weakened against 11 of the top 19 trading pairs. The largest losses were against the NOK (-1.76%) and the BRL (-1.97%) whilst the most significant gains were against the TRY (3.14%) and the USD (1.1%).
  • There was no notable data from the UK, so overall the currency has just been treading water over the past week. There have been announcements of support to UK consumers with a “cost of living support package”. This could act as a drag on the GBP as it could add to the inflation issue seen in the country, despite supporting consumers.
  • This week, the UK will have a much shorter trading week, with the Queen’s Jubilee on Thursday and Friday being UK bank holidays.

ZAR

  • The South African Rand also had a mixed week, strengthening against 11 of the top 19 trading pairs. The sharpest declines were against the NOK (-2.0%) and the BRL (-1.37%), with the largest gains against the TRY (2.99%) and the CNY (1.88%).
  • The Rand strengthened slightly from positive outlook ratings by the S&P. This is quite a big factor, as the previous negative outlooks were a drag on any prospective investment in the country. Another factor to consider for long-term trade is the continuation of loadshedding in South Africa, which does not seem to be dissipating.
  • This week, there is no significant data from South Africa. The major concern are the prospective fuel price increases in the country, which would be a major drag on the spending power of all consumers, in addition to adding to cost push inflation for most goods transported in the country.

AUD

  • The Australian Dollar had a good performance last week, strengthening against 15 of the top 19 currencies. The most notable gains were against the TRY (3.72%) and the USD (2.21%), with the largest losses against the NOK (-1.16%) and the BRL (-1.28%).
  • The market reacted positively to the Australian election with the unknown being replaced by optimism and the currency rallied. In addition, certain parts of China are emerging from lockdowns, which should help the AUD as trade can resume to some degree.
  • The Australian GDP growth data for Q1 will be released on Wednesday. The GDP is expected to grow by approximately 3%, which would be AUD positive. On Thursday, the Australian trade balance will be released, which will show gains as well, especially with the strengthening AUD and the rally in gold process in the past few months.

NZD

  • It was another good week for the New Zealand Dollar, which strengthened against 17 of the top 19 trading pairs. The largest upside moves were against the TRY (4.15%) and the USD (2.39%), with the most significant downside moves against the NOK (-0.81%) and the PLN (-0.72%).
  • The main data event last week was the increase in interest rates from the RBNZ, where a 50-basis point hike was implemented, which follows the general trend.
  • There is no notable data from New Zealand this week. We will monitor to see if the NZD can hold on to the recent gains and if the lockdown restrictions in China influences the currency.

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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