USD: Will it be a third week lower, or be the week of recovery?

The US dollar ended last Friday lower for a second-straight week against all other major currencies as investors continued to see the US’ momentum slowing, especially after the prior Friday’s disappointing retail sales growth. Despite July’s US housing starts being stronger than expected, July’s consumer inflation and building permits results came in below analyst expectations, which weighed heavily on the greenback.

This week could either be the greenback’s third week lower or be recovery week. Despite this month’s poor productivity, Q2 GDP, and retail sales results, investors are still somewhat optimistic for the US economy and a potential interest rate hike by the end of the year, meaning the US dollar has room to fall this week if there are worse-than-expected results. Tuesday will bring August’s preliminary manufacturing activity and July’s new home sales data later in the morning, while Wednesday will show existing home sales for July along with June’s housing price data. On Thursday morning we’ll see durable goods orders, business activity, and jobless claims data. A big Friday will cap off the week with 2nd quarter GDP inflation data out in the morning and Fed Chairman Janet Yellen’s comments that night at the annual symposium in Jackson Hole, Wyoming. Investors will be looking for clues from Yellen to better gauge if there will be a chance for an end-of-year interest rate hike, which could help the dollar end the week higher.

EUR: Upward momentum to be tested by this week’s Post-Brexit tests

The euro ended last week at its highest levels since the day before the Brexit vote against the US dollar as Eurozone economies continued to display strength in the post-Brexit era. The August ZEW surveys released last week showed European Union and German institutional investors feeling much more confident about the Eurozone economy than they were last month, while July’s German producer inflation and Eurozone trade surplus data from June exceeded expectations, helping push the euro higher.

There will be plenty of tests for the euro this week as investors have grown more confident in the Eurozone’s post-Brexit health after a string of better-than-expected economic results have come out in recent weeks. And as with last week, any negative surprises this week could throw the euro off its upward path. Look for August’s preliminary business activity data out of France, Germany, and the broader Eurozone to come out on Tuesday, while Wednesday will bring second quarter GDP data out of Germany – the region’s strongest economy. Thursday will be largely quiet with a business confidence survey for August out early, while Friday morning will essentially finish the euro’s week with German consumer confidence survey and second quarter GDP results from France.

GBP: Will last week’s rebound carry the pound through a slow data week?

The pound finally had a rebound last week after touching post-Brexit lows the week before, mostly as July’s retail, producer, and consumer inflation smashed analyst expectations. With investors being so bearish on the pound since the Brexit vote, the positive news on top of the weaker US dollar gave the British currency a boost.

This week is likely to be much less exciting with little new or significant data set to be released until Friday morning’s preliminary second quarter GDP and business investment releases. The pound’s value will likely rely on how weak other countries and currencies look compared to the British economy and currency. The pound has the benefit of low expectations after the Brexit vote, meaning a fall in peer currencies could help support sterling.

CAD & AUD: Loonie keeps rising with oil, Aussie cools into a slow week

The Canadian dollar touched its highest levels since early July compared to the US dollar last week as oil prices rallied past $47 per barrel, despite Friday’s retail sales miss. This week has started with stronger-than-expected wholesale sales growth results for June, but will be almost completely quiet on the data front with nothing for the northern currency to ride on besides oil prices. Simply put, another week of crude oil rallying could help push the Loonie higher.

The Australian dollar traded choppy and ended slightly lower last week as investors cooled their optimism after the currency reached a three-month high the week before. This week will bring almost no significant data for the currency to ride on, with the exception of some second quarter construction work completion and private capital expenditure data to come out on Tuesday and Wednesday night, respectively. Like the pound, the Aussie dollar could move higher in relation to its counterparts should other economies look relatively weaker.