US Dollar (USD) Rises amid Renewed Rate Rise Bets
The US Dollar (USD) jumped yesterday afternoon as stronger-than-expected US data boosted expectations of ongoing aggressive interest rate rises from the Federal Reserve.
Both the JOLTs job openings and the ISM manufacturing PMI exceeded forecasts, indicating resilience in the US economy. This in turn gives the Fed more leeway to keep raising rates.
Looking ahead, USD investors may be somewhat cautious ahead of the Fed decision. The Fed will almost certainly hike by another 75bps, but traders will be keen to see what tone Fed Chair Jerome Powell strikes in the subsequent press conference. If he hints at smaller hikes in the future, USD could plunge.
Pound (GBP) Wobbles following Mixed Manufacturing PMI
The Pound (GBP) traded without a clear directional bias yesterday amid mixed results from the UK’s final manufacturing PMI.
Although the PMI printed above preliminary estimates, it still revealed a deepening contraction in UK factory activity.
Today, UK data is thin on the ground. As a result, Sterling may be vulnerable to losses.
Euro (EUR) Wavers amid Lack of Data
The Euro (EUR) saw some choppy trade yesterday amid a lack of notable Eurozone data and a shifting sentiment in European markets.
However, the Euro did manage to post modest gains against some of its weaker peers, with the upside coming despite the rally in the US Dollar – with which EUR is negatively correlated – later in the session.
This morning’s final manufacturing PMI could hurt EUR exchange rates, with an expected contraction adding to worries about a looming Eurozone recession.
Canadian Dollar (CAD) Slips following Poor PMI
The Canadian Dollar (CAD) edged lower over the course of yesterday’s trade after Canada’s manufacturing PMI revealed a worse-than-expected contraction in the country’s factory activity.
Turning to today, the commodity-linked ‘Loonie’ could trade on oil price dynamics amid a lack of Canadian economic data.
Australian Dollar (AUD) Gains amid Risk-Positive Trade
The Australian Dollar (AUD) rose overnight as an upbeat mood boosted the risk-sensitive ‘Aussie’. Reports that China’s property market is now stable cheered global investors.
New Zealand Dollar (NZD) Rises amid Cheery Market Mood
Likewise, the New Zealand Dollar (NZD) ticked higher in overnight trade as a risk-on mood supported the ‘Kiwi’.