US Dollar (USD) Slides amid Risk-On Rally
A risk-on market mood sapped the safe-haven US Dollar’s (USD) appeal yesterday, causing the currency to tumble against many of its peers.
Lingering headwinds following Friday’s core PCE price index may have also impacted the ‘Greenback’. The Federal Reserve’s preferred measure of inflation unexpectedly declined, dampening Fed rate hike bets.
USD faced further headwinds in the afternoon after the ISM manufacturing PMI printed below forecasts. US factory activity slumped to a near three-year low, prompting fresh selling around the US Dollar.
A number of US data releases today could impact movement. Most notable, perhaps, is the latest JOLTS job openings figure. Could another decline in vacancies dent the US Dollar by hinting at a slackening labour market?
Pound (GBP) Firms amid BoE Rate Hike Bets
The Pound (GBP) found some success yesterday, recouping overnight losses, as bets on another Bank of England (BoE) interest rate rise and a cheery mood supported Sterling.
Following last week’s remarks from BoE Governor Andrew Bailey and Friday’s surprise fourth-quarter GDP growth, markets are expecting another 25bps hike from the bank at its next meeting.
Later this afternoon, a speech from BoE Chief Economist Huw Pill could impact the Pound. Could hawkish comments boost Sterling?
Euro (EUR) Mixed amid Risk-On Trade
The Euro (EUR) faced mixed movement yesterday, softening against its stronger peers and gaining ground elsewhere.
A cheery market mood dampened the safer Euro’s appeal, although the currency enjoyed its negative correlation to a tumbling US Dollar.
This morning, the European Central Bank (ECB) releases its latest consumer expectations survey. Any signs that consumer inflation expectations are easing could dent ECB rate rise bets, which in turn would likely hurt the common currency.
Canadian Dollar (CAD) Sheds Earlier Oil-Inspired Gains
After strengthening in early-morning trade thanks to a jump in oil prices, the crude-linked Canadian Dollar (CAD) later trimmed its gains. CAD’s positive correlation with USD and a contraction in Canada’s manufacturing PMI both dragged the currency lower.
Turning to today, a lack of Canadian economic data may mean that USD and oil movements continue to drive the ‘Loonie’.
Australian Dollar (AUD) Falls following RBA Decision
The Australian Dollar (AUD) weakened overnight after the Reserve Bank of Australia (RBA) left interest rates unchanged at its monetary policy meeting.
However, the RBA did signal that this was simply a pause in policy tightening, not the end of the hiking cycle, thereby limiting AUD’s losses.
New Zealand Dollar (NZD) Capped by AUD Correlation
The New Zealand Dollar (NZD) moved mostly sideways last night. An upbeat mood supported the risk-sensitive ‘Kiwi’, although the currency suffered from its positive correlation with the ‘Aussie’ Dollar.