Sterling starts on a high, then falls from grace

• Euro muddling along…
• US Dollar fails to benefit from Federal news and economic updates
• Rollercoaster for commodity currencies

Sterling started the week on a positive note, having ended the previous week on a high and at its strongest against the Euro for almost a year, thanks to wage growth and better employment figures. Excitement began to build in advance of the UK inflation data. Later in the week, however, the Pound’s fortunes took a turn for the worse, as disappointing inflation and retail sales data – with March figures heavily affected by the unexpectedly wintry weather conditions – hit Sterling and knocked it down against its key currency partners.

The British currency then fell further on comments from Bank of England (BoE) Governor Carney on Thursday, who made his feelings clear about not increasing interest rates. This chips away at confidence in the UK economy, so the Pound bore the brunt.

Euro muddling along…

Like the US Dollar, there’s been little movement for the Euro towards the end of this week, although the single currency started the week a little slower on a gloomy tone from the latest economic sentiment index from Germany, which is always a key indicator for the health of the Eurozone’s economy. The Euro has remained at similar levels against its major currency pairings, the US Dollar and the Pound.

US Dollar fails to benefit from Federal news and economic updates

The US Dollar began the week weaker – in contrast to its usual safe haven status – as geopolitical concerns sent shockwaves across the markets. The US Dollar hasn’t moved a huge amount this week, other than in response to the Pound’s recent weakness. This is despite a barrage of data and Federal Reserve announcements coming from the US. Commodity prices and economic data from China have also had negative effects on the US Dollar and commodity currencies, saved by some good news from Chinese stock markets later in the week.

Rollercoaster for commodity currencies 

The Australian Dollar has been under pressure recently, with mixed results from the Australian economy, poor business and consumer confidence, positive rhetoric from the Reserve Bank of Australia, and disappointing data from China having an effect on the Aussie currency. Key export partner China’s slowing growth sent ripples across all the commodity currencies, but by mid-week, China’s recovering stock markets boosted the commodity currencies across the board, and the Australian Dollar led the pack, able to gloss over below par jobs data. Business confidence and conditions also improved, helping add some fuel to the Aussie Dollar’s strength.

Mixed messages for Canadian Dollar

The Canadian Dollar enjoyed a more successful week, strengthening again on stronger employment figures after being put under pressure by the Canadian central bank’s statement. This is welcome news with the shadow of the North American Free Trade Association (NAFTA) trade negotiations looming. The GBP-CAD exchange rate reached levels not seen since the Brexit vote this week; and although these do not match levels seen pre-referendum, the Canadian Dollar is currently good value.