US Dollar (USD) Drops as Traders Trim Fed Rate Rise Bets
The US Dollar (USD) slumped during Friday’s trade after a decline in year-on-year wage growth saw markets scale back bets for further aggressive Federal Reserve interest rate rises.
In addition, payrolls data exceeded forecasts, indicating that the US labour market remains strong. With the Fed looking likely to achieve a soft landing, global markets rallied. The subsequent risk-on mood added to the safe-haven Dollar’s downside.
Risk appetite could continue to drive USD today. Later in the evening, speeches from Fed officials could impact the ‘Greenback’. Could hints of a dovish tilt further dent the US Dollar?
Pound (GBP) Continues to Fall as Markets Digest BoE Decision
The Pound (GBP) extended its downside on Friday as headwinds from Thursday’s Bank of England (BoE) decision continued to hit Sterling.
The BoE said that the UK is in a recession, which it expects will last until mid-2024. Meanwhile, interest rates will continue to rise and inflation will remain elevated. The bank warned of a ‘very challenging outlook for the UK economy.’
A lack of market-moving data today could leave Sterling vulnerable to volatility, while economic concerns could keep some pressure on the Pound.
Euro (EUR) Rises on Hawkish ECB and Weaker USD
The Euro (EUR) firmed against many of its peers on Friday. Above-forecast economic data gave EUR a lift in the morning, along with hawkish comments from European Central Bank (ECB) President Christine Lagarde.
Later on, the Euro enjoyed its strong negative correlation to the US Dollar, as the American currency suffered a sharp sell-off.
This morning, the single currency is finding some support after German industrial production fared better than expected in September.
Canadian Dollar (CAD) Muted despite Red-Hot Jobs Report
The Canadian Dollar (CAD) struggled on Friday, despite a staggeringly strong jobs report and rising oil prices. CAD’s increasingly positive correlation with the US Dollar undermined the upside.
With no Canadian data due out today, commodity prices could impact the resource-linked ‘Loonie’.
Australian Dollar (AUD) Fluctuates amid Shifting Market Mood
The risk-sensitive Australian Dollar (AUD) was mixed overnight as the market mood wavered. While investors remained upbeat following Friday’s US jobs data, disappointing Chinese trade figures caused some turbulence.
New Zealand Dollar (NZD) Rangebound amid Tepid Risk Appetite
Likewise, the risky New Zealand Dollar (NZD) traded without a clear direction last night amid the mixed market sentiment.