US Dollar Declines as Market Mood Improves

US Dollar (USD) Falters as Risk Appetite Returns

The US Dollar (USD) declined yesterday as a bullish impulse in markets saw traders shun the safe-haven ‘Greenback’.

Recent comments from Federal Reserve officials once again dampened expectations for ongoing aggressive interest rate rises. This both cheered markets and weighed on the US Dollar.

Today, markets expect broadly positive results from the latest durable goods orders and PMI surveys out of the US. Weaker results could worry global investors, which in turn could spark risk aversion and thereby support USD.

Pound (GBP) Rebounds amid Positive UK Headlines

The Pound (GBP) initially stumbled yesterday as concerns about the UK economy and government borrowing dented the currency.

However, GBP managed to recover as the day went on. UK mortgage rates fell and two workers’ unions suspended strike action – both potentially positive developments for the UK economy.

Looking ahead, the UK’s flash PMIs for November are in the spotlight. Will a deepening contraction in the British services sector hammer Sterling?

Euro (EUR) Recoups Losses as Consumer Morale Improves

The Euro (EUR) also slipped at the beginning of yesterday’s session as worries about gas shortages and rising prices once again rattled EUR investors.

Later in the day, the single currency was able to recoup some of these losses. Eurozone consumer confidence data exceeded forecasts, improving from -27.5 to -23.9, rather than -26.

The Eurozone PMIs are also out this morning. Both manufacturing and services beat forecasts, which could support EUR as the day goes on.

Canadian Dollar (CAD) Struggles despite Rising Oil

The Canadian Dollar (CAD) wavered yesterday, heading lower overall. Although an uptick in crude prices supported the oil-linked ‘Loonie’, the Canadian currency suffered from its increasingly positive correlation with the weakening US Dollar.

Australian Dollar (AUD) Dented by Poor PMIs

The Australian Dollar (AUD) fell at the start of the overnight session after Australia’s latest PMIs missed forecasts. However, a bullish market mood helped the risk-sensitive ‘Aussie’ regain ground.

New Zealand Dollar (NZD) Rises on RBNZ Rate Hike

The New Zealand Dollar (NZD) zigzagged higher overnight after the Reserve Bank of New Zealand (RBNZ) raised interest rates by 75bps.

Samuel Birnie

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