Pound (GBP) Fluctuates as Investors Readjusted Rate Hike Expectations
The Pound (GBP) fluctuated last Friday as investors continued to mull over the Bank of England’s (BoE) policy outlook.
The BoE’s dovish forward guidance on Thursday saw investors continue to pull away from Sterling. Despite the final services index coming in above forecast, the Pound sank over the session.
With little impactful data today, GBP may trade on market sentiment. A shift towards risk-on trade could support the Pound.
Euro (EUR) Bolstered as Eurozone PMIs Beat Forecasts
The Euro (EUR) strengthened last Friday, following the final printing of the composite and service indexes for January.
However, the single currency’s negative correlation with the US Dollar meant the Euro’s upside potential remained limited as USD exchange rates surged.
Retail sales figures for January are due to print this morning. If the sharp fall currently forecast prints true, the single currency could weaken over today’s session.
US Dollar (USD) Soars on Forecast-Beating Data
The US Dollar (USD) skyrocketed on Friday, following the release of January’s non farm payroll data and ISM non-manufacturing PMI.
517,000 jobs were created in January, significantly above the 185,000 forecast. Similarly, the services sector index pointed to a dramatic return to growth, printing at 55.2. As such, Federal Reserve rate hike bets jumped, bringing huge tailwinds for the ‘Greenback’.
Today is a quiet day for USD, with few data releases scheduled. As such risk sentiment is likely to be the main driver for the ‘Greenback’. An upbeat mood could weigh on the US Dollar.
Canadian Dollar (CAD) Buoyed by Strong US Dollar
The Canadian Dollar (CAD) gained ground last week thanks to its close correlation with the US Dollar. As the ‘Greenback’ soared, the ‘Loonie’ gained ground alongside it. However, falling oil prices may have capped CAD’s gains.
The Ivey PMI is due to print later today. The index is forecast to show that the Canadian economy will remain in contraction territory, which may weaken the ‘Loonie’.
Australian Dollar (AUD) Ticks Up amid Forecast-Beating Retail Data
The Australian Dollar (AUD) edged higher overnight, following upbeat quarterly retail sales data. However, AUD’s gains may have been capped by increasing Sino-American tensions.
New Zealand Dollar (NZD) Muted by Risk Averse Trade
The risk-sensitive New Zealand Dollar (NZD) remained flat overnight, as a cautious market mood kept the ‘Kiwi’ grounded.