Weekly Brief

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Weekly Brief - 7th September 2018

EUR Weekly Currency Update

The single currency has largely been weighed down this week by indications that Euro zone economic growth will be modest at best over the coming year, according to a Reuters poll of economists who unanimously said the trade war between the United States and China threatens the outlook for the single currency. The forecast looks steady at 0.4% every quarter through to the end of 2019 according to the poll, but there are some suggestions that growth is losing momentum and could be further impacted if a trade war between the United States and China escalates further, hurting business and consumer sentiment and keeping financial markets on edge.

Most of the movement on the pound was related to Brexit, rather than domestic economic statistics. A raft of good news, including an extended tenure for Bank of England Governor Mark Carney to provide some stability and indications that a deal is approaching meant that the pound could take some advantage of the wavering euro.

USD Weekly Currency Update 

The dollar consolidated near a one-week high against a basket of currencies on Monday as tensions around global trade and a continued sell off in emerging markets fuelled demand for the greenback. However, it may be that at some point that the fallout from the turbulent presidency of Donald Trump has an impact on the dollar, with criminal proceedings and investigations into key figures in the Trump camp ongoing and the US Mid-Terms looming, which could see the Republicans lose control of Congress and provide a very different political landscape going forward.

The pound managed to recoup some losses against the dollar from earlier in the week thanks to a wave of positive Brexit sentiment, but the picture going forward isn’t clear. There’s a lot at stake both sides of the pond and at the moment the greenback looks in the slightly stronger position – but a day is as long a time on the currency markets as it is in politics.

CAD Weekly Currency Update

After some tough weeks, the Canadian dollar strengthened against the greenback towards the end of the week. The Bank of Canada left its policy rate on hold at 1.5% and left the Loonie at seven-week lows but recovered after a senior Bank of Canada official said the central bank had discussed the pace at which it could raise interest rates. Senior Deputy Governor Carolyn Wilkins pointed to some possible hope on the horizon after confirming that there has been discussion of whether the Bank’s gradual approach to raising rates remains appropriate.

In recent weeks, the global trade picture and escalating tensions have been harrying the Loonie but this change of approach saw the Canadian dollar bounce back slightly, although still not showing any real or sustained dominance against the pound or any other major currency at this point.

AUD Weekly Currency Update

The Australian dollar fell to a 27-month low against the US dollar this week after the decision by the Reserve Bank to maintain the current interest rate. Coupled with political uncertainty, a slowing of jobs and growth and the looming impact of the US/China trade war, the Aussie is also struggling against sterling.

The pound has enjoyed sustained strength against the Australian dollar towards the end of the week, riding high on some positive Brexit news and taking advantage of the impact of static interest rates down under.

NZD Weekly Currency Update

The New Zealand dollar appears to be caught up in a variety of factors harrying other major currencies. It appeared to follow its antipodean neighbour lower towards the end of the week and the Kiwi currency remains under pressure due to the US/China trade war and escalating tensions which could have an impact on the economy.

The pound has enjoyed sustained strength towards the end of the week, riding high on some positive Brexit news and taking advantage of more challenging conditions elsewhere in the world

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