US Dollar (USD) Unable to Rally despite Strong Jobs Data
The US Dollar (USD) experienced volatility at the end of last week. The non-farm payrolls report smashed forecasts, while average wage growth also caught investors off guard by unexpectedly rising.
USD spiked following the strong releases, as it casts some doubt on whether the Federal Reserve will go ahead with a planned slowdown in policy tightening. However, despite the data, markets continued to bet on a smaller rate hike at the Fed’s next meeting. USD shed its gains, moving sideways overall.
Looking ahead, the ISM non-manufacturing PMI is due out this afternoon. Economists foresee a slowdown in the US services sector, which could further undermine the ailing US Dollar.
Pound (GBP) Lifted by Northern Ireland Protocol Optimism
The Pound (GBP) gained ground on Friday, despite some choppy trade, as hopes of a resolution to the Northern Ireland Protocol dispute cheered GBP investors.
Simon Coveney, Ireland’s Minister for Foreign Affairs, said a ‘landing zone on the protocol is possible in the next few weeks.’ His comments echoed those of European Commission President Ursula von der Leyen and added to a generally more upbeat tone around the UK’s economic outlook.
The UK’s final services PMI is in focus today. Could the survey score boost the Pound by beating preliminary estimates, as manufacturing did last week?
Euro (EUR) Mixed amid Poor Data
The Euro (EUR) was mixed on Friday, as a decline in German exports and a large slump in Eurozone producer prices weighed on the single currency.
However, the downside was cushioned due to the Euro’s negative correlation with the US Dollar, as USD – despite briefly spiking – remained weak.
After the final services PMI this morning, the Eurozone retail sales report is the next data release for EUR. An expected slump in sales could drag on the common currency.
Canadian Dollar (CAD) Struggles despite Positive Employment Report
The Canadian Dollar (CAD) jumped on Friday after Canada’s latest employment data exceeded forecasts. However, the currency couldn’t hold its gains. Declines in crude oil prices and the US Dollar – both of which CAD is correlated with – dragged the ‘Loonie’ lower.
Amid a lack of notable Canadian data today, the commodity-linked Canadian Dollar may trade on oil price dynamics.
Australian Dollar (AUD) Wavers amid Mixed Data
The risk-sensitive Australian Dollar (AUD) fluctuated in overnight trade amid mixed Australian data, a downbeat services PMI survey from China, and an upbeat market mood.
New Zealand Dollar (NZD) Trades in Tandem with AUD
The New Zealand Dollar (NZD) also wobbled overnight as a lack of New Zealand data saw the ‘Kiwi’ trade according to its positive correlation with the ‘Aussie’.