US Dollar (USD) Jumps as Fed Hints at More Rate Hikes
After initially softening, the US Dollar (USD) managed to recoup some losses yesterday afternoon as the latest US jobs data beat forecasts.
In the evening, the Federal Reserve raised interest rates by 75bps but signalled a slowdown in the pace of rate rises. The Dollar dropped before Fed Chair Jerome Powell clarified that the slowdown would not happen immediately, prompting a rebound in USD.
Following last night’s Fed decision, attention now turns to the latest US data releases. If economic reports continue to beat expectations, USD could climb further.
Pound (GBP) Drops amid Cost-of-Living Concerns
The Pound (GBP) stumbled yesterday after new food inflation figures from the British Retail Consortium (BRC) stoked fresh fears over the UK’s cost-of-living crisis.
With surging prices putting a squeeze on consumer spending, the UK economy is sliding into a recession.
Looking ahead, the Bank of England (BoE) interest rate decision is in the spotlight today. Markets expect a 75bps rate rise, but amid the uncertain fiscal policy outlook a smaller move is possible. Could a 50bps hike dent GBP?
Euro (EUR) Muted following Manufacturing PMI
The Euro (EUR) wavered near weekly lows yesterday after the Eurozone’s latest manufacturing PMI revealed an even deeper-than-expected contraction in factory activity.
In addition, the Euro traded in relation to its negative correlation with the US Dollar. Initially shored up by a weaker Dollar, the single currency struggled for support when USD recovered in the afternoon.
Turning to today, the Eurozone’s unemployment rate is expected to hold at a record low of 6.6% for a third consecutive month. Such a result could lift the single currency.
Canadian Dollar (CAD) Volatile as Oil Prices Waver
The Canadian Dollar (CAD) was choppy during yesterday’s trade as fluctuations in the oil market impacted the crude-linked currency.
Canada’s balance of trade data this afternoon could impact the ‘Loonie’. If the country’s trade surplus narrows again, CAD exchange rates could soften.
Australian Dollar (AUD) Fluctuates amid Mixed Data
The Australian Dollar (AUD) was volatile in overnight trade as markets digested some mixed data. Australia’s final services PMI and balance of trade data both beat forecasts, but China’s services PMI came in worse than expected.
New Zealand Dollar (NZD) Trudges Lower amid Risk-Off Trade
The New Zealand Dollar (NZD) also wavered overnight, heading lower overall, as a mostly downbeat market mood dampened the appeal of the risk-sensitive ‘Kiwi’.