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Economic calendar: top 4 currencies to watch this week

Economic calendar: top 4 currencies to watch this week

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The US dollar was little changed last week as the financial market watched the spreading coronavirus pandemic and the brewing tensions between the US and China. The euro held steady too as most European countries started to reopen their economies. On the other hand, the British pound declined slightly as the financial market received more negative data from the country. Let us now look at the five main currencies to watch this week.

Hong Kong dollar

The Hong Kong dollar (HKD) weakened against the US dollar on Friday as the Chinese parliament began its sessions. The key concern was that China outlined a plan to bypass Hong Kong legislature and impose its security operations these. As a result, most investors worried that the autonomous city would experience another wave of protests. They were right. Today, Hong Kong police fired teargas to confront demonstrators in the city.

As you recall, Hong Kong had similar protests last year as residents protested a new extradition bill. Those protests led to a decline in the city’s economy for the first time in decades. Hotels lost business and many retailers closed their organisations. Therefore, the Hong Kong dollar is set to see some volatility when the markets open later today.

The Hong Kong dollar is trading at 7.76 against the USD.

Australian dollar

The Australian dollar lost its momentum last week as the market continued to worry about US and China relations. The two superpowers have been trading war of words, risking the first phase of the trade deal that was signed in January. The US has accused China of not being transparent in its coronavirus response. China has rejected these accusations but its actions on Hong Kong have provoked the US.

The Australian dollar is vulnerable because of the close relationship between Australia and China. That is because it exports more than 70 per cent of its goods to China.

The Australian dollar is trading at 0.6535 against the USD.

South African rand

The South African rand will be one of the key currencies to watch this week because of a report that was released by the S&P. See, the currency reached its lowest level against the USD in April. It then started a sharp upward trend and is now trading at the highest point since March.

On Saturday, the S&P Global warned investors about the frailty of the South African economy. The report said that the country will continue seeing weak growth even after it reopens the economy. That is because many sectors such as the hospitality, tourism, mining, and manufacturing will take a longer period to recover. The South African rand will also react to the April inflation numbers that will be released on Wednesday

The South African rand is trading at 17.63 against the US dollar.

US dollar

The US dollar was little changed last week. The dollar index, which measures its strength with a basket of currencies, remained slightly below 100 last week. This week, the dollar will react to the geopolitical events happening around the world. It will also react to any scientific advancements in the development of a coronavirus vaccine. A vaccine or drug will be negative for the US dollar. Meanwhile, the USD will react to a statement by Jerome Powell, the Fed Beige book, and key economic data like personal spending and consumption and jobless claims.

Other currencies to watch this week

Other key currencies to watch this week will be the Japanese yen, British pound, and the euro. The yen, which is viewed as a safe haven, will react to any geopolitical uncertainties while the pound will react to developments on Brexit. Any developments on financing the European Union coronavirus response will provide more support to the euro.

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Crispus Nyaga
Crispus Nyaga
Crispus is a financial analyst with over 9 years in the industry. He covers the stock market, forex, equities, and commodities for some of the leading brands. He is also a passionate trader who operates his family account. Crispus lives in Nairobi with his wife and son.