US Dollar Surges Higher following Strong Services PMI

Pound (GBP) Stumbles amid Economic Warnings

The Pound (GBP) fluctuated lower yesterday as UK economic worries offset expectations of a 50-bp rate hike from the Bank of England (BoE).

In its latest quarterly economic outlook, the National Institute of Economic and Social Research (NIESR) warned that the UK is heading towards a period of stagflation. Additionally, the final UK services PMI printed lower than preliminary estimates.

Today, GBP investors will be focusing on the BoE interest rate decision at noon. While markets predict a 0.5% hike, the bank’s forward guidance may be more impactful than the rate rise itself. If the BoE signals a slower pace of tightening, Pound Sterling could slip.

Euro (EUR) Dragged Down by Stronger USD

The Euro (EUR) wavered yesterday amid some mixed data. Although the Eurozone’s final services PMI was revised higher, retail sales in the bloc unexpectedly slumped.

A surge in the US Dollar (USD) later in the session saw the Euro fall against many of its peers due to EUR’s negative correlation with USD.

This morning, the European Central Bank (ECB) publishes its latest economic bulletin. With the threat of a Eurozone recession looming, a downbeat tone from the ECB could dent the single currency.

US Dollar (USD) Soars as Data Exceeds Forecasts

The US Dollar was muted through the first part of yesterday’s session as a risk-on mood dampened the appeal of the safe-haven ‘Greenback’.

Strong US data in the afternoon then saw the Dollar surge higher. Economists expected both the ISM services PMI and US factory orders to show slower growth; instead, both improved.

Later this evening, a speech from the Federal Reserve’s Loretta Mester could impact the US Dollar. Until then, the market mood may determine USD movement.

Canadian Dollar (CAD) Fluctuates amid Oil Volatility

The commodity-linked Canadian Dollar (CAD) spiked yesterday as oil prices jumped. However, crude then retreated, leading CAD to lose its gains against its stronger peers.

Canada’s balance of trade figures could cause some movement today, although oil price dynamics may exert the most influence on the ‘Loonie’.

Australian Dollar (AUD) Firms on Strong Trade Data

The Australian Dollar (AUD) ticked higher overnight as an unexpected increase in Australia’s trade surplus boosted the ‘Aussie’.

New Zealand Dollar (NZD) Rises amid Risk-On Trade

The New Zealand Dollar (NZD) also rose in overnight trade thanks to an upbeat market mood, which increased the appeal of the risk-sensitive ‘Kiwi’.

Samuel Birnie

Contact Samuel Birnie


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