No-deal Brexit?



Sterling was one of the G10 underperformers last week with Brexit related uncertainty the main talking point amid the rising prospect of a no-deal scenario. Recent dovish rhetoric from the Bank of England may also still be in play while Friday’s data barrage was largely in line with expectations.

GBP/USD dropped through $1.28 on Friday to a fresh one-year low of $1.2723 although is up around 0.2% this morning.

Looking ahead, we await a busy data week with claimant count data tomorrow, inflation on Wednesday and retail sales on Thursday.


The US Dollar emerged as one of the main beneficiaries from turmoil in Turkey behind the Japanese Yen. The Dollar Index powered above 96 on Friday to its best level since last July at 96.40 after some mixed CPI data – headline CPI was a touch softer than expected at +2.9% (f/c. +3.0%) while core was slightly stronger at +2.4% (f/c. +2.3%). The index has inched higher again this morning to a peak of 96.505.

Looking ahead, import prices are out tomorrow, retail sales and industrial production on Wednesday, building permits and housing starts on Thursday and Michigan Sentiment on Friday.


After a fairly quiet week, the Euro fell sharply on Friday as investors began to fret about the risk of contagion to Euro Zone banks from the turmoil in Turkey. EUR/USD plunged through the year-to-date lows to its lowest level since last July at $1.1394. The pair has continued lower this morning to 1.1365.

Euro Zone GDP and industrial production are out tomorrow alongside French and German CPI. Euro Zone CPI data follows on Friday.


The Japanese Yen rose to the top of the G10 pile on Friday as investors flocked to safe-haven assets amid turmoil in emerging markets. Stronger-than-expected Japanese GDP also provided a boost with USD/JPY falling to a five-week low of 110.51 and extending to 110.75 this morning.

This week brings industrial production data due tomorrow and trade data on Thursday.


Fresh impulses for the Swiss Franc were limited last week with only minor support from safe-haven demand. We saw a sharp drop in EUR/CHF on Friday however with the pair plunging to a one-year low and continuing lower this morning.

Looking ahead, we await another quiet week on the data front with Thursday’s PPI the sole release.


The Australian Dollar finished Friday as one of the weaker G10 currencies as dovish RBA impulses and rising trade tensions took their toll. AUD/USD slipped below 0.73 on Friday to its lowest level since January 2017 and had continued lower this morning.

Westpac sentiment data and wage price are out on Wednesday and employment data on Thursday while RBA Governor Lowe speaks on Friday.


The Canadian Dollar rallied on Friday as data showed the Canadian economy added a solid 54.1K jobs in July while the unemployment rate dropped by two-tenths to 5.8% USD/CAD rose to its best level in two weeks at 1.3133 and has continued higher this morning to 1.3177.

Manufacturing sales and ADP are out later today while CPI follows on Friday.


The New Zealand Dollar plunged on Thursday after a dovish tilt by the RBNZ who left the OCR on hold at 1.75% but lowered their forecasts for the rate path in the coming year. RBNZ Assistant Governor McDermott added soon after the that changes of a rate cut have increased. NZD/USD continued the move lower on Friday and this morning to reach its lowest level since early 2016.

Data releases are sparse this week with PPI input the sole release on Thursday.


The Swedish Krona finished last week as the weaker of the two G10 Scandinavian currencies after Friday’s Swedish CPIF data came in line with expectations. Although it was more Dollar driven, USD/SEK surged back above 9 to its best level since January 2017 at 9.1428 on Friday.

Swedish unemployment ticked up to 6.9% this morning although had little impact and is the only data release this week.


The Norges Bank are widely expected to raise the key policy rate in September, meaning that this Thursday’s meeting could be a relatively tame affair.

Stronger-than-expected CPI data released on Friday will only strengthen the argument for higher rates and pushed the Krone to four week high versus its Scandinavian counterpart on Friday at 1.0943.

Besides the rate decision we await trade data on Wednesday.

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