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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 25 July 2022.

weekly market watch 11 January 2021

Week starting 25-07-2022

 
 

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’s rally finally ended abruptly last week as the big players in the market took profits after the outrageous strength the USD had over the past month. Overall, the USD lost value against 14 of the top 19 currencies we monitor. The most notable losses were against the Polish Złoty (PLN) (-1.63%) and the ZAR (-1.56%), whilst the most impactful gains were against the Turkish Lira (TRY) (1.91%) and the Brazilian Real (BRL) (1.12%).

  • The USD retreated from its highs as the market started cooling its expectations of a 100 basis-point (bps) rate hike from the Fed this week. The market is troubled by the prospect of a possible recession looming if they hike rates too fast, thus the pullback in the USD.

  • This week, there will be important data releasing from the US. The main event is the US Fed interest rate decision where it is expected to hike rates by 75 bps. If the rate increase is larger, the USD will strengthen drastically. The GDP growth for Q2 will be released on Thursday. If this figure is negative, it would indicate that the US has slipped into a technical recession.

EUR

  • Last week, the European Central Bank raised rates for the first time in over a decade, which caused the Euro to strengthen against 11 of the top 19 currencies we monitor. The largest gains were against the TRY (2.42%) and the BRL (1.92%), whilst the greatest losses were against the PLN (-1.12%) and the ZAR (-1.10%).
  • There was a substantial amount of data from the EU last week, with inflation data coming out higher once again – in line with global trends. The EU raised rates by 50 bps, higher than expected and for the first time in over a decade, which propped up the EUR.
  • This week, we will monitor to see if the EUR can hold on to its gains after the rate hike. One major data event this week is the EU GDP growth data which will be released on Friday. GDP growth is expected to slow but remain positive.

GBP

  • The British Pound had an overall negative week, with the currency losing value against 12 of the top 19 currencies we monitor. The most notable losses were against the PLN (-1.47%) and the ZAR (-1.39%), whilst the largest gains were against the TRY (2.19%) and the BRL (1.21%).
  • Last week, UK inflation hit even higher levels than anticipated, putting pressure on the Bank of England to possibly increase the pace and magnitude of rate hikes. On Friday, the UK retail sales were released and were less disappointing than expected, with a contraction of 0.1% instead of 0.3%.
  • There will be no significant data from the UK this week, so the currency will take its cues from global factors such as the US Fed rate decision.

ZAR

  • The South African Rand performed incredibly well last week due to interest rates being raised more than anticipated. The ZAR strengthened against all but one of the currencies we monitor. The only loss was against the PLN (-0.05%), whilst the largest gains were against the TRY (3.47%) and the BRL (2.96%).
  • South African Inflation followed the global trend last week and hit a 13-year high. This forced the South African Reserve Bank’s hand in having to raise interest rates more than expected, by 75 bps.
  • This week, we will monitor to see if the gains in the ZAR can be maintained. Additionally, the producer price index data will be released on Thursday, which is a leading indicator of inflation. It is expected to rise – signaling further rate hikes on the horizon.

AUD

  • The Australian Dollar had a positive week, with the currency gaining ground against 14 of the top 19 currencies we monitor. The most notable gains were against the BRL (3.68) and the TRY (3.19%), whilst the most impactful losses were against the PLN (-0.40%) and the ZAR (-0.37%).
  • There was minimal data from Australia last week, with the focal point being the Reserve Bank of Australia’s (RBA’s) meeting minutes on Tuesday – indicating the RBA’s view on the market and future movements from them on combatting inflation and rate increases.
  • This week, Australian inflation data will be released on Wednesday. This is expected to increase, but to what extent will be significant.

NZD

  • The New Zealand Dollar had a positive week, with the currency gaining ground against 12 of the top 19 currencies we monitor. The most notable gains were against the TRY (3.10%) and the BRL (2.52%), whilst the largest declines were against the PLN (0.48%) and the ZAR (-0.45%).
  • Last week, New Zealand’s inflation data hit levels last seen in the 1990s, thus becoming a major concern for the country. This could result in the Reserve Bank of New Zealand raising rates faster than previously anticipated.
  • This week, there will be no significant data from New Zealand so global factors will move the markets.

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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