US Dollar Volatile as Markets Remain Jumpy due to New Covid Variant

Pound (GBP) Softens amid Lack of Data 

The Pound (GBP) fell through yesterday’s session as a lack of UK data left Sterling vulnerable to losses, with ongoing Brexit uncertainties playing on investors’ minds. 

Comments from Bank of England (BoE) policymaker Catherine Mann may have added to the downside. Mann warned that the Omicron variant may dent consumer spending and said that it was ‘premature’ to talk about a BoE rate hike. 

Today’s UK manufacturing PMI may cause movement if the finalised figures differ from the flash results. GBP investors may also be looking ahead to a speech from BoE Governor Andrew Bailey for fresh clues about future policy decisions. 

Euro (EUR) Dips despite Positive German Employment Reports 

The Euro (EUR) rose sharply just before yesterday’s European session began and then started losing ground against most of its rivals, despite some fairly positive German employment data. 

With no clear catalyst for the movement, the single currency may simply have softened due to being overbought when the Omicron variant shook markets on Friday

With the final Eurozone manufacturing PMI revised down this morning, EUR could struggle for the first part of today’s session. 

US Dollar (USD) Volatile on Fed Rate Hike Bets 

The US Dollar (USD) was initially on the back foot yesterday as the emergence of the new Omicron Covid variant saw traders pull back on bets of an early rate hike from the Federal Reserve. 

The ‘Greenback’ then spiked after Fed Chair Jerome Powell suggested that the central bank could still speed up its tapering process. However, it was unable to hold most of these gains. 

Looking ahead, both the ADP employment change report and the ISM manufacturing PMI are out today. With economists expecting positive results, the US Dollar could climb. 

Canadian Dollar (CAD) Wavers as Markets Remain Jumpy 

The Canadian Dollar (CAD) experienced some volatility yesterday, trading sideways overall, as markets continued to react to the new Covid variant. 

This afternoon, forecasts suggest Canada’s manufacturing PMI for last month will edge lower, which may weigh on CAD exchange rates. 

Australian Dollar (AUD) Firms as Data Exceeds Expectations 

The Australian Dollar (AUD) gained ground overnight as both the Australian manufacturing PMIs and the country’s GDP figures beat forecasts. 

New Zealand Dollar (NZD) Gains alongside AUD 

The New Zealand Dollar (NZD) also ticked higher in overnight trade, benefitting from an improved market mood and the positive correlation the ‘Kiwi’ has with the ‘Aussie’. 

Samuel Birnie

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