US Dollar (USD) Slides as Jobs Data Sparks Market Rally
The safe-haven US Dollar (USD) tumbled on Friday after an upbeat US jobs report sparked a risk-on rally in markets.
While the US economy added more jobs than expected in December, average earnings growth eased. This signals that the US labour market remains strong while also suggesting that inflationary pressures are cooling, thereby taking pressure off the Federal Reserve to continue raising interest rates.
With US data in short supply today, the ‘Greenback’ could find itself driven by investors’ appetite for risk.
Pound (GBP) Rebounds as Risk Appetite Improves
Deepening concern over the UK’s economic outlook initially pressured the Pound (GBP) on Friday morning, with declining house prices and a contraction in UK construction activity adding to the bleak picture for the British economy.
However, Sterling leapt higher against its safer peers in the afternoon thanks to a sharp improvement in the market mood.
Looking ahead, UK data is thin on the ground this week until the latest GDP data on Friday. As a result, domestic headlines and risk appetite could dominate GBP movement.
Euro (EUR) Stumbles as Eurozone Inflation Cools
The Euro (EUR) initially inched higher on Friday, until a larger-than-expected cooldown in Eurozone inflation created headwinds for the common currency.
EUR faced further losses later in the session as the improvement in market mood saw the safer Euro drop against its riskier peers.
Later this morning, the Eurozone’s unemployment rate for November could boost the single currency. Forecasters expect it to hold steady at a record low of 6.5%.
Canadian Dollar (CAD) Falls alongside Government Bond Yields
The Canadian Dollar (CAD) slipped at the end of last week’s trade as a sharp drop in Canadian government bond yields dented the ‘Loonie’.
Amid a lack of Canadian economic data today, movements in the oil market could drive the crude-linked Canadian Dollar.
Australian Dollar (AUD) Firms amid Risk-On Trade
The risk-sensitive Australian Dollar (AUD) strengthened overnight as a bullish run in markets lifted the ‘Aussie’.
New Zealand Dollar (NZD) Rises as Sentiment Improves
The New Zealand Dollar (NZD) also gained ground during last night’s trade as the upbeat market mood supported the riskier ‘Kiwi’.