Pound and Euro Waver on Mixed Manufacturing PMIs

Pound (GBP) Wobbles on Mixed PMI 

The Pound (GBP) wavered yesterday, trending sideways overall, as the UK’s final manufacturing PMI presented a mixed picture of UK factory activity. 

Additionally, cautious comments from Bank of England (BoE) Governor Andrew Bailey weighed on Sterling in the afternoon. Bailey warned that the UK’s economic recovery still has ‘quite a long way to go.’ 

With no UK data out today, domestic political and economic headlines could affect GBP exchange rates. 

Euro (EUR) Trades Sideways on Factory Concerns 

The Euro (EUR) also traded mostly flat yesterday following the Eurozone’s finalised manufacturing PMI. The PMI reading was high overall but the report highlighted ‘severe supply-related constraints’. 

Chris Williamson of IHS Markit said that the strong score ‘masks just how tough business conditions are’. He added that ‘supply chains continue to deteriorate at a worrying rate.’ 

The latest unemployment rate from the Euro area could lift the single currency this morning, as economists expect it to have dropped from 7.4% to 7.3% in October. 

US Dollar (USD) Makes Late Gains on Hawkish Fed and Strong Data 

The US Dollar (USD) experienced some volatility yesterday but managed to climb late in the afternoon following hawkish comments from Federal Reserve Chair Jerome Powell

In addition, the ADP payrolls data beat forecasts to show a continued recovery in the US labour market and the ISM manufacturing PMI also printed marginally above expectations. 

Looking ahead, USD investors will first be looking to the latest initial jobless claims. They’ll then turn their attention to a quartet of Fed speeches later in the afternoon. 

Canadian Dollar (CAD) Weakens as Omicron Weighs on Oil 

The oil-sensitive Canadian Dollar (CAD) lost ground yesterday as WTI crude fell by over $3, with worries that Omicron may dent demand and recent releases of strategic reserves cooling the oil market. 

The OPEC oil cartel and its allies are meeting today to discuss how to respond to these developments. Any decisions from the group will likely affect oil prices and therefore also CAD exchange rates. 

Australian Dollar (AUD) Muted as Trade Surplus Narrows 

The Australian Dollar (AUD) wavered overnight following mixed trade data. While the figure beat forecasts, it was still Australia’s smallest trade surplus since May. 

New Zealand Dollar (NZD) Steady on Mixed Market Mood 

Meanwhile, the New Zealand Dollar (NZD) moved sideways in overnight trade as a tepid market mood left the risk-sensitive ‘Kiwi’ without a clear direction. 

Samuel Birnie

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