US Dollar (USD) Stumbles as Jobless Claims Jump
The US Dollar continued to trim its post-Powell gains during yesterday’s trade, as the tailwinds of a more hawkish Fed began to fade.
The ‘Greenback’ extended its losses in the afternoon. Initial jobless claims jumped to a two-and-a-half-month high, suggesting that the labour market may be starting to soften. This, in turn, dampened Fed rate hike bets.
Today, the US non-farms payrolls report is in focus. Last month’s bumper reading saw the US Dollar soar. Could another robust print spark more gains for USD?
Pound (GBP) Rallies as Markets Correct Post-Fed Slump
The Pound (GBP) strengthened yesterday after entering oversold conditions following its sharp decline in the wake of Federal Reserve Chair Jerome Powell’s hawkish testimony on Tuesday.
Sterling also shrugged off downbeat domestic headlines and a souring market mood. Expectations of more interest rate rises from the Bank of England (BoE) may have helped the Pound’s recovery.
A stronger-than-expected UK GDP print looks to give the Pound another leg up this morning, after reporting solid rebound in growth in January.
Euro (EUR) Pushes Higher amid USD Weakness
Russia-Ukraine worries and mixed messages from European Central Bank (ECB) policymakers initially subdued the Euro (EUR) yesterday.
However, EUR was able to rise against some of its peers as the session progressed, with the Euro enjoying its negative correlation to a weaking US Dollar (USD).
Comments from European Central Bank (ECB) policymakers could impact EUR exchange rates today. The main one to watch is ECB President Christine Lagarde, who could create tailwinds for the common currency if she strikes a hawkish tone.
Canadian Dollar (CAD) Fluctuates Lower amid Oil Volatility
The commodity-linked Canadian Dollar (CAD) traded in tandem with oil prices yesterday. WTI crude rose in the afternoon, lifting the ‘Loonie’, before declining in the evening and dragging CAD down with it.
Looking ahead, the latest employment data could stir up headwinds for CAD. Economists expect Canada’s jobless rate to have ticked higher last month.
Australian Dollar (AUD) Wobbles in Mixed Trade
The Australian Dollar (AUD) struck a new year-to-date low against the US Dollar overnight on Thursday amid a sense of caution ahead of today’s US payroll release. An improving mood subsequently allowed the ‘Aussie’ to erase some of these losses.
New Zealand Dollar (NZD) Subdued amid Cautious Mood
The New Zealand Dollar (NZD) also struggled to attract support in overnight trade as a tepid market mood limited the appeal of the risk-sensitive ‘Kiwi’.