A shorter week doesn’t mean peace and quiet for currency markets

• China-US tensions capture commodity currencies in their wake
• Could April herald springtime for Sterling?
• US Dollar gets unexpected uplift

We’ve had a volatile week for currency markets, but as the initial unpredictability subsides, clear currency winners emerge – quite the opposite of the week before! The Euro and British Pound have enjoyed the limelight, while safe haven status has failed to strengthen the Japanese Yen and US Dollar
 
This week’s winning currency is the Euro, having strengthened on positive economic data. The single currency is closely followed by the New Zealand Dollar – strong despite low business confidence in the country – and Sterling, which is deftly weathering the Russia storm and looks set to spring upwards for April, in a currency trend that all the markets are expecting could repeat itself again next month. 

China-US tensions capture commodity currencies in their wake

Not a good week for the traditional commodity currencies. Tensions between the US and China are not helping currencies in Asia Pacific and the US Dollar, in particular, with concerns about trade wars spooking the markets and sending a number of currencies downward. 

The Japanese yen is also under pressure, thanks to the Bank of Japan’s seemingly relaxed stance on monetary policy. This actually serving to help the US Dollar recover some of its recent weakness, as an alternative “safe haven” to the Japanese Yen.
 
Despite their safe haven accolade, both the Japanese Yen and US Dollar are the losing currencies this week, with the Australian Dollar not far behind, at some of the lowest rates against the Pound that we have seen since the Brexit vote. 

Could April herald springtime for Sterling?

Markets are debating whether the traditional upswing for the Pound will happen again this April; something we’ve traditionally seen at the start of springtime in the UK. The Pound often pushes up in April, and it seems to happen regardless of the economic and political context. However, could Brexit be big enough to tether the Pound on its travels next month? Certainly, it could strengthen further against the US Dollar given the current Dollar weakness, but the Euro has also just started a season of strength, and the US Dollar has had a brief boost from better economic results. Watch this space…

You may wish to consider planning any Sterling purchases you wish to make over the coming weeks, particularly against the US and Australian Dollars. 

US Dollar gets unexpected uplift

Stronger than expected US data, with an upward revision of the US Gross Domestic Product (GDP) figures, has pushed the US Dollar back a little against its UK currency partner today, as markets still contemplate the Brexit transition agreement and changes in Asian markets.

Euro enjoying the spotlight

Markets were not expecting the Eurozone data to make much of an imprint on currency markets, but the Euro is standing strong, helped by US Dollar weakness and signs of improvement and recovery for the Eurozone economy.

New Zealand business confidence flounders, but economic outlook improves

Speaking of economic outlook, New Zealand received some disappointing news in its latest Business Confidence Index, showing business sentiment across the country falling to -20 for February 2018. However, the latest New Zealand trade balance data showed signs of recovery for the New Zealand economy, helping keep the New Zealand Dollar on an even keel.

Be prepared…

The week started calmly for the currency markets, then got chaotic on trade fears and unexpectedly market-moving economic data. Markets are still skittish about trade tariffs and what will happen next with the US and China – and beyond… With public holidays in many countries coming up, allow plenty of time for your currency trades and keep a close eye on the rates.

A reminder of our opening times:

Friday 30th March : Closed
Monday 2nd April: Closed
Tuesday 3rd April: Open as usual 

Next week will be busier in terms of economic data, with the all-important US Non-Farm Payrolls and the latest figures from the Institute for Supply Chain management (ISM).