Today's Exchange Rates Roundup of the Latest Key Events in the Forex Calendar with Exchange Rate Predictions and Forecasts from Leading Financial Institutions
As currency exchange markets concluded a significant week for the euro, pound sterling, US dollar, Canadian, New Zealand and Australian dollars, we take a look at the latest exchange rate forecasts from leading banking and financial institutions and include the events to watch in this week's packed forex calendar.
Commodity dollars are suffering a major slump today as iron ore and crude oil continue to slip from recent highs, boosting demand for safe-haven assets such as EUR and USD while AUD, NZD and CAD all tumble.
Oil continues to slip away from its recent high of US$40 per barrel and is currently back at levels last seen on March 4th, while iron ore has fallen to US$50.
Pound Sterling Today: Travel Agencies Warn that Brexit would make Travel more Expensive
A Brexit is likely to increase the cost of travelling abroad, a study by Britain’s leading trade association for tour operators and travel agents has revealed, with weak GBP/EUR and GBP/USD exchange rates cited as one area of concern.
According to a report by Abta, ‘In the longer term, following a Brexit, travel is likely to become more expensive.
Depending on trade agreements, new taxes and levies could be introduced, and travel businesses are also likely to raise prices in order to recoup any costs absorbed during a transition period, such as increased supplier contracting costs owing to a weakening in the value of sterling.’
Live Pound/Australian Dollar/NZ Dollar/Euro/US Dollar Exchange Rates
On Thursday the Euro to British Pound exchange rate (EUR/GBP) converts at 0.855
The GBP to EUR exchange rate converts at 1.169 today.
The live inter-bank GBP-USD spot rate is quoted as 1.251 today.
FX markets see the pound vs australian dollar exchange rate converting at 1.916.
Today finds the pound to canadian dollar spot exchange rate priced at 1.717.
The GBP to NZD exchange rate converts at 2.11 today.
NB: the forex rates mentioned above, revised as of 2nd May 2024, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks.
Canadian Dollar Forecast: Short-Term Technicals are "Bearish, with caution"
The Canadian dollar has seen strong gains for three weeks in a row. The CAD to USD exchange rate is now at the best conversion seen since November 2015.
It seems that fears the current oil rally was premature and unsustainable could have been justified as Brent Crude fell below US$40 per barrel today, weakening the Canadian Dollar today.
The fall comes after Iran announced it had no intentions to freeze oil production until it was pumping four million barrels per day - 1.2 million more than the current rate - likely throwing OPEC’s oil production freeze meeting into jeopardy.
Notable events in the CAD's economic calendar are Wednesday's Canadian Manufacturing Sales (source) and Friday's Core Retai Sales and CPI (source).
According to Scotiabank, the US dollar to Canadian dollar exchange rate outlook could see a reversal:
"Momentum indicators are bearish and USD/CAD is flirting with a break of Wednesday’s multi-month low."
"However, positive divergence has emerged as the RSI has failed to confirm the most recent lows in spot. DMI’s are also softening in tandem."
"USDCAD is at the lower end of a descending wedge formation—these are typically resolved with a reversal."
"The wedge would be violated on a break below 1.3200."
Euro to Dollar Forecast
Low-impacting events for those investors interested in the euro dollar trade include Monday's EUR Industrial Production m/m, Tuesday's French Final CPI m/m and Employment Change q/q, Wednesday's German 10-y Bond Auction, Thursday's Final Core CPI y/y and Trade Balance and Friday's Prelim UoM Inflation Expectations (USD).
Important EUR/USD events to watch include the US Core Retail Sales on Tuesday (source), PPI (source) and Empire State Manufacturing Index. Wednesday sees the US Building Permits (source) and US Core CPI.
Wednesday also sees the all-important US oil Inventories (source), FOMC Economic Projections, FOMC Statement, Federal Funds Rate (source) and the FOMC Press Conference.
Thurday sees the Philly Fed Manufacturing Index, and Unemployment Claims (source) and Friday the Prelim UoM Consumer Sentiment.
In terms of the FOMC, ABNAMRO suggest no change to rates at this week's meeting, however, they do warn that a hawkish tone could see the EUR/USD and GBP/USD exchange rates fall:
"Next week the Fed will decide on monetary policy. Market consensus is for no change in policy."
"However, if the Fed were to sound more hawkish than expected, the US dollar may recover some ground."
Goldman Sachs see the medium to long-term bias to the negative for the EUR/USD:
"Tactically, while we hold to our 12-month EUR/$ forecast of 0.95, we don’t think risk-reward for Euro downside is compelling in the near term."
According to Danske bank, the European Central Bank have sidelined any euro devaulation strategy:
"The fact that the ECB did not take this opportunity to implement a two-tiered deposit system is a fundamental EUR positive, as it suggests this potential source of downside to the currency via continued downward pressure on the money-market rates has been taken off the table (for now, at least)."
"...Indeed, in our view it is increasingly difficult for the ECB to bring about further EUR/USD downside."
So where do the analysts see the euro to dollar exchange rate in the short to medium term trend?
"Going forward the key sources of potential downside in the cross are set to derive from a continued improvement in risk sentiment and/or markets pricing in Fed hikes more aggressively. While this could lend support to USD near term, we maintain that EUR/USD will be range-bound on a 1-3M horizon around the 1.10 level and headed higher thereafter still targeting 1.16 in 12M."
Scotibank, however, suggest the more familiar downside risk is present for the EUR/USD in the short-term:
"EUR rallies since August (topping 1.17) have exhausted themselves at subsequently lower levels, with ~1.15 in October, ~1.1380 in February, and ~1.1220 on Thursday."
"All of these rallied have been position-driven and we suspect that Thursday’s move eradicated the bulk of the remaining EUR bears."
"We now look to a steady EUR decline with a near term focus on the early March lows around 1.0820."
New Zealand Dollar Outlook
In the week ahead, we have RBNZ Gov Wheeler speaks on Monday (source), Global Dairy Trade Price Index on Tuesday (source) and the Current Account (source) also on Tuesday. Wednesday has the New Zealand GDP (source).
ABNAMRO forecasters see further decline in the New Zealand dollar to US dollar exchange rate as we progress through 2016 to 2017:
"The New Zealand dollar (NZD) slumped by about 2 cents after the Reserve Bank of New Zealand (RBNZ) unexpectedly lowered the Official Cash Rate (OCR) by 25bp on 10 March."
"We expect the RBNZ to further cut interest rates as soon as June. A weaker NZD/USD towards 0.61 is likely by the end of this year."
Australian Dollar Exchange Rate Forecast
Key events this week to watch in relation to the Australian dollar are: the RBA's Monetary Policy Meeting Minutes on Monday (source). Wednesday sees the RBA Assist Gov Debelle speaks (source), the Employment Change and the Unemployment Rate (source).
ABNAMRO predict the AUD exchange rates will ultimately decline due to the growing threat to further rate cuts by the RBA:
"We maintain our bearish view in the Australian dollar as the RBA is likely to lower monetary policy rates further in May given subdued inflation outlook and soft labour market."
"We expect the unemployment rate to rise further in February which will be reflected in the next jobs report on 17 March. Our base and ferrous metals analyst judges that iron ore prices have risen too fast and could come under pressure."
Pound to Dollar Exchange Rate Predictions
The GBP, similarly to the USD, has an equally packed economic calendar this week.
Wednesday sees the UK Average Earnings Index (source), Claimant Count Change and Unemployment Rate.
Thursday is key for the Pound Sterling, with all eyes on the Bank of England. MPC Official Bank Rate Votes, Monetary Policy Summary and the Official Bank Rate all released at 8:00 AM GMT (source).
The near-term pound to dollar exchange rate outlook is bearish to Scotiabank:
"The GBP rally appears to be fading on approach of the 50 day MA at 1.4321. The exhaustion is evident on the hourly chart, with negative divergence in both the MACD and RSI (bottom chart). Hourly momentum indicators have failed to confirm GBP’s gains since last week."