France
7 October 2024
Weekly Market Headlines:
- US economy created 254k new jobs in September. A better-than-expected US Unemployment report has strengthened the US dollar, knocking the pound off its recent perch.
- The pound is still performing well against the euro, trading just 0.6% below its highest point in 2.5 years. It’s also 3.9% above its lowest level in January.
- Key economic data this week may impact future interest rate decisions, which could cause fluctuations in the currency market.
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The US jobs report, much stronger than the predicted 145,000, led investors to believe that the Federal Reserve might delay a large 0.50% interest rate cut. This boosted the value of the US dollar.
Since the US dollar has significant influence in the FX market, its rise further weakened the pound, following comments from Bank of England Governor Andrew Bailey. He suggested the UK might need more aggressive interest rate cuts due to concerns over the Middle East.
This week, the pound could be sensitive to new data, as markets assess the likelihood of faster rate cuts in the UK and whether the US dollar’s rise will continue.
Key events this week include Eurozone retail sales and German inflation reports, which could provide clues about the European Central Bank’s next move. Currently, there is a 98% chance of an interest rate cut by the ECB, 94% for the US Federal Reserve, and 93% for the Bank of England.
As these decisions affect currency strength, we may see some market volatility as new data is released.
What events might move exchange rates this week?
GBP
- Friday: UK GDP
EUR
- Monday: Eurozone Retail Sales
- Friday: German Inflation
USD
- Wednesday: Interest Rate decision Minutes
- Thursday: Inflation
