US Dollar (USD) Surges as PMI Beats Forecasts
The US Dollar (USD) climbed yesterday as a souring market sentiment boosted the safe-haven currency’s appeal.
The ‘Greenback’ jumped even higher in the afternoon after the ISM manufacturing PMI beat forecasts, holding steady in August rather than falling. This increased expectations of a 75-bp rate rise from the Federal Reserve, which helped the US Dollar Index rise to a new 20-year high.
Turning to today’s session, the latest non-farm payrolls figure is in focus. Economists expect another strong reading, but employment data earlier in the week disappointed markets. Will a strong payrolls report boost USD, or could another data miss dent rate rise bets?
Pound (GBP) Wallows near Lows as UK Fears Persist
The Pound (GBP) remained under intense pressure yesterday as the UK’s economic outlook shows no signs of improving.
The Resolution Foundation thinktank released new research suggesting that 3 million people could be forced into poverty as energy bills surge, underlining the potentially catastrophic impact of the cost-of-living crisis.
Looking ahead, Sterling could continue to languish near recent lows today amid a lack of UK data. Any more troubling domestic headlines could push the Pound lower.
Euro (EUR) Slips amid Recession Warning
The Euro (EUR) initially edged higher yesterday following an unexpected rise in German retail sales. However, EUR quickly turned south.
In a new report, Fitch Ratings warned that a full severance of Russian gas supplies to Europe ‘looks like a reasonable assumption’, and that a Eurozone recession appears likely. In addition, the Euro suffered from its negative correlation to a turbocharged US Dollar.
Today’s Eurozone PPI figure could boost the single currency as markets expect a strong monthly increase. This could further fuel bets for a 75-bp rate rise from the European Central Bank (ECB).
Canadian Dollar (CAD) Firms despite Headwinds
The Canadian Dollar (CAD) managed to rise against its weaker peers yesterday, despite falling oil prices and a downbeat Canadian manufacturing PMI. The upside was reinforced by positive US data, as strength in the American economy often means greater demand for Canadian exports.
Amid a lack of Canadian data today, crude oil prices could drive movement in the commodity-linked ‘Loonie’.
Australian Dollar (AUD) Flat amid Hushed Market Mood
The Australian Dollar (AUD) traded mostly sideways last night as the market mood was mixed ahead of today’s US employment data.
New Zealand Dollar (NZD) Rebounds following Poor Trade Report
The New Zealand Dollar (NZD) slipped overnight following downbeat trade data. The ‘Kiwi’ then managed to recover, without a clear catalyst for the movement.