US Dollar (USD) Rises on Rate Hike Bets
The US Dollar (USD) firmed on Friday as the latest US employment data exceeded forecasts, showing that the labour market remains tight.
This in turn cemented expectations for another 75-bp interest rate rise from the Federal Reserve, boosting the US Dollar and souring market sentiment.
Later today two Fed officials are due to speak. Following Friday’s jobs data, more hawkish rhetoric could underpin the ‘Greenback’.
Pound (GBP) Falls as UK Bond Yields Continue to Rise
The Pound (GBP) initially ticked higher on Friday as the UK currency seemingly entered oversold conditions, prompting some dip-buying among investors.
However, as the day progressed Sterling slipped. Higher expectations of another aggressive interest rate rise from the Fed pushed UK bond yields up, exacerbating fears about the sustainability of the UK’s debt levels.
In the absence of any UK data today, Sterling may trade on domestic factors.
Euro (EUR) Mixed following German Data Miss
The Euro (EUR) fluctuated through Friday’s session, trading without a clear directional bias.
Below-forecast German data weighed on the single currency. However, a gloomy market mood helped EUR rise against its riskier rivals.
Turning to today, a speech from European Central Bank (ECB) Chief Economist Philip Lane could support EUR, if Lane strikes a hawkish tone. However, fears of an escalation in the Russia-Ukraine war, following the attack on the Crimean Bridge over the weekend, could keep the single currency under significant pressure.
Canadian Dollar (CAD) Surges as Oil Prices Climb
The Canadian Dollar (CAD) strengthened at the end of last week as a strong rally in oil prices boosted the crude-linked currency.
With no Canadian economic data due out today, oil price dynamics could drive most movement in the ‘Loonie’.
Australian Dollar (AUD) Stumbles as Service Sector Contracts
The Australian Dollar (AUD) fell sharply overnight after new data revealed an unexpected contraction in Australia’s services sector last month. In addition, an anxious market mood following recent news in Ukraine weighed on the risk-sensitive ‘Aussie’.
New Zealand Dollar (NZD) Muted amid Fears of Russian Retaliation
The New Zealand Dollar (NZD) wavered lower last night as fears of an escalation in the Russia-Ukraine war rattled markets, thereby dampening the appeal of the riskier ‘Kiwi’.