Pound (GBP) Rises on Strong Service Sector Performance
The Pound (GBP) firmed on Friday after the UK’s final PMI results came in stronger than preliminary estimates.
The UK services sector – which accounts for around 80% of the country’s total economic output – expanded at its fastest pace since June 2022. This raised hopes that the British economy may be able to avoid a recession this year.
Today, GBP data is thin on the ground so Sterling could move without a clear directional bias.
Euro (EUR) Struggles following Below-Forecast Data
Poor Eurozone data saw the Euro (EUR) initially stumble on Friday. The bloc’s final PMI printed lower than the flash figure. Meanwhile, a larger-than-forecast contraction in the monthly producer price index dampened European Central Bank (ECB) rate rise bets.
However, hawkish comments from multiple ECB officials helped the common currency claw back some losses. Overall, EUR moved mostly sideways.
Later this morning, a forecast recovery in Eurozone retail sales could support the single currency.
US Dollar (USD) Wavers Lower amid Mixed Conditions
The safe-haven US Dollar (USD) fluctuated through Friday’s session, with Federal Reserve rate hike bets and a risk-on market mood pulling the currency in two different directions.
Market sentiment won the tug of war, with USD declining in the evening amid an increasing appetite for risk. A strong US services PMI failed to provide the ‘Greenback’ with lasting gains. Instead, the data may have added to the upbeat tone among traders.
Looking ahead, markets expect the latest US factory orders report to show a large contraction in January. Such a result could dent the US Dollar.
Canadian Dollar (CAD) Falls as Oil Prices Dip
The end of last week’s session saw the Canadian Dollar (CAD) drop as a sudden slump in oil prices pulled the crude-linked currency lower. While oil managed to bounce back, CAD remained weak.
For the ‘Loonie’, today’s Ivey PMI is in focus. An expected decline could weigh on CAD exchange rates.
Australian Dollar (AUD) Underpinned by China News
The risk-sensitive Australian Dollar (AUD) wavered in a narrow range overnight. A cautious market mood weighed on AUD, but expectations of more economic stimulus from the Chinese government boosted the ‘Aussie’, due to the close trading relationship between China and Australia.
New Zealand Dollar (NZD) Ticks Lower amid Risk-Off Trade
The New Zealand Dollar (NZD) softened overnight as a subdued sentiment among investors saw them shun the riskier ‘Kiwi’.