Matters just continue to go from bad to worse for the Turkish Lira. The currency is in complete freefall and the outlook is still that there is an increased risk of further losses ahead. This is despite the Lira being crippled by meeting new historic lows on a near-daily basis as of late, a consequence of investors having an extreme lack of confidence in Turkish assets.
The pound has started the new week how it ended the last one: lower. It fell below the $1.34 handle for the first time since December earlier this morning before bouncing back slightly ahead of Brexit talks and publication of UK inflation data later in the week.
The U.S. dollar appreciated against major rival currencies on Friday. The dollar rally is back on after the two of the largest parties in Italy agreed to form a coalition government and Japanese inflation retreated. Although there is no plan for Italy to exit the European Union it could put it to the test with its fiscal strategy.
Today is fairly light on the data front. The only notable exception will be Canadian inflation and retail sales figures, which will be released later at 13:30 BST (08:30 EDT). CPI inflation is expected to have risen in April by another 0.3% like it did in March. Meanwhile, retail sales are also expected at have risen by 0.3% month-over-month in March, while core sales, which exclude automobiles, are expected at have risen 0.5% after the previous month’s disappointing flat reading.
The euro/U.S. dollar (EUR/USD) currency pair is breaking down as the dollar upsurge continues. This follows buck-denominated gold's meltdown from the day before. The metal remains under pressure amid an appreciating US dollar and rising bond yields.
This week will be lighter in terms of major scheduled economic events than last. That being said, there still be some potentially market-moving data to watch. Among other things, we will have the Australian employment report and GDP estimates from Japan and the Eurozone. So, the Aussie, yen and euro could all move sharply at various points this week.
The U.S. dollar rally lost momentum during the week and recorded its third day of depreciation versus other major pairs. The U.S. dollar continues to gain versus emerging market currencies as more signs of a global growth slowdown appear. The US consumer price index (CPI) came in under expectations and raised concerns on how many rate hikes could the Fed get away with in 2018.
The Aussie could extend its gains next week unless the RBA’s monetary policy meeting minutes on Tuesday convey a surprisingly dovish message or the Australian employment numbers on Thursday disappoint expectations. From the United States, next week’s key data include retail sales on Tuesday and industrial production and some housing market data on Wednesday.
Ahead of the Bank of England’s Super Thursday, the pound has found some much-needed support. It had fallen viciously for three weeks and the selling gathered pace ever since the Bank of England Governor Mark Carney strongly hinted at the prospects of no interest rate rises this month, owing to weakness in UK data.