Similarly to last week, currency movements in all major currencies this week are likely to be dominated by economic news coming out of the USA.
There is a continuing trend of poor US data bringing down currencies seen as risky – particularly the Euro, and pushing up currencies seen as ‘safe’ including the Japanese Yen and US Dollar itself; news from the US is continuing to be seen as a key indicator of the global situation in general which means that negative data from the nation is ironically not bringing down the Dollar.
US data this week will therefore be important with a large amount of news releases from consumer confidence on Tuesday, mortgage applications on Wednesday, jobless claims on Thursday and earnings data on Friday. For those purchasing investments in the US, a strengthening Dollar means it may be best to fix an exchange rate in advance, whereas for those purchasing property in the Euro-zone the currency may continue to weaken. It is possible to speak with a currency broker and set a realistic target rate of exchange so that you can be informed when this is achieved.
Although negative US Dollar news is draining the Euro, there may be some glimmer of positive news from Europe itself. Lower jobless rates and positive manufacturing data from Germany may help to give the Euro some strength although whether this will be enough to sway risk-averse investors at present remains to be seen. Another ‘safe’ currency, the Swiss Franc, is also at significant highs against the Euro.
The Pound is experiencing volatility as the hype around the slowing UK recovery grows. Sterling has begun the week by dropping against the US Dollar and Euro following a report by the National Federation of Housing which suggests that UK home owners will experience another four years of negative equity. Manufacturing and construction data on Wednesday and Thursday may bring more movement.
Sterling Rises on Hopes of EU Softening Tone on Backstop