GBP: Brexit risks this week
EUR: Off games for a little bit
USD: All eyes on Friday’s jobs report
Sterling
It’s likely to be a Brexit week for sterling this week, with markets waiting on the conclusion of conversations between the UK and EU over the ability of the UK to be able to send certain exports – chilled meats predominantly – into Northern Ireland.
Chilled meats are not the entire ballgame but represent a huge opportunity for politicians to agree something on Brexit. Failure to do so would likely cause sterling downside once again, as investors shift their focus from how quickly the UK recovers from Covid-19 to the longer term issues from Brexit.
With volatility low and the political news until Wednesday instead focusing on the former Health Secretary’s private life, sterling should remain range bound.
Euro
The euro loves a quiet summer and that is exactly what it is giving us. In a world wherein there is the opportunity for a currency to take a run against the USD and appreciate dramatically, the euro has a note from Mum asking if they can be excluded from games for a while.
Data in the coming week may suggest a little more underlying strength than we have given the Eurozone credit for but unless inflation numbers are sharply stronger, there is little reason for the euro to be pushing higher.
US dollar
The highlight of the week is Friday’s jobs data and given the recent noises from the Federal Reserve we expect investors to use jobs market data as a handle for their guesses as to when the US central bank will cut stimulus and start talking more concretely about rate hikes.
Ahead of then, and with volatility low, it may be difficult to get excited about these markets.
Elsewhere
We are going to be keeping an eye on the kiwi dollar in the coming weeks. Last week saw it win out as the best performing currency in the G10 and it remains backed by strong data and a hawkish central bank.
While NZ data is thin on the ground this week, if global markets stay calm then we expect the NZD to push higher.
Market rates
Today’s interbank rates at 08:28 against sterling. Movement vs yesterday.
| Euro | €1.166 ↓ |
| US dollar | $1.392 ↓ |
| Australian dollar | $1.833 ↓ |
| South African rand | R19.77 ↑ |
| Japanese yen | ¥154.0 ↓ |
Have a great day.
