The US Dollar was one of the few major currencies to appreciate in trade-weighted terms last week, with the Euro, Sterling, Swiss Franc, Australian and Kiwi Dollars all depreciating.
- The Dollar gained 0.5% thanks in part to the release of strong monthly macro data (durable goods) and better-than-expected GDP growth of 2.1% in Q2.
- The Euro trade-weighted index slipped 0.5% to the weak end of a 2% range in place since mid-January, with the main catalyst being the ECB’s increasingly dovish rhetoric alongside weak German macro data.
- In the UK, the appointment of Boris Johnson as Prime Minister and his nomination of a pro-Brexit cabinet has kept Sterling volatility elevated. Sterling weakened a further 0.2%, with markets concerned about the risk of Boris Johnson taking the UK out of the EU without a deal on 31st October.
- The Swiss Franc hit a 2-year high last Wednesday and while it has since shed 0.5% there has been growing speculation that the Swiss National Bank will have to cut its policy rate/and or intervene in the FX market.
- The Australian Dollar had proved resilient in the wake of two successive RBA policy rate cut but last week weakened about 1.4%.
- The Kiwi Dollar had been on the best performers in recent months, appreciating to a 14-week high as markets priced out the chance of another RBNZ rate cut near-term. However the trade-weighted index is down 1.2% from a week ago, seemingly on some profit taking.
