US Dollar (USD) Regains Ground amid Risk Aversion
The US Dollar (USD) found some support yesterday as a risk-off market mood buoyed the safe-haven currency.
Disappointing US data caused some volatility, with both the ADP employment report and the ISM services PMI coming in worse than forecast. However, these downbeat releases ultimately added to the gloomy market mood, thereby lending USD support.
If the latest initial jobless claims figure remains low today, pointing to a still-tight US labour market, the ‘Greenback’ could regain further ground.
Pound (GBP) Ticks Lower despite Upbeat PMI
The Pound (GBP) softened yesterday, despite the UK’s final PMI results confirming that the country’s vital services sector expanded last month.
The downside may have come as the PMI also contained evidence that British inflationary pressures are easing, which in turn could have slightly dampened Bank of England (BoE) interest rate rise bets.
Turning to today’s session, Sterling could trade without a clear trajectory due to a lack of UK economic data.
Euro (EUR) Subdued amid USD Strength
The Euro (EUR) was somewhat muted yesterday as the currency suffered from its negative correlation with the US Dollar, which enjoyed a recovery.
Positive Eurozone economic data limited the downside, however. German factory orders smashed forecasts to show strong growth, while the Eurozone’s final PMI confirmed a strong expansion in the bloc’s services sector.
Looking ahead, Eurozone data is in short supply today. As a result, external factors – such as Russia-Ukraine news or USD movement – could drive the Euro.
Canadian Dollar (CAD) Rises despite Declining Oil Prices
The strengthening US Dollar pulled the Canadian Dollar (CAD) up with it yesterday, due to the CAD’s positive correlation to USD. However, a dip in oil prices limited the upside for the commodity-linked ‘Loonie’.
CAD exchange rates could face losses later today. Economists expect Canada’s jobless rate to tick higher while the Ivey PMI is forecast to indicate that Canadian economic activity dipped into contractionary territory.
Australian Dollar (AUD) Falls following Weaker Trade Data
The Australian Dollar (AUD) softened overnight after downbeat trade data put some pressure on the ‘Aussie’, with both exports and imports unexpectedly contracting.
New Zealand Dollar (NZD) Slides amid US-China Tensions
The New Zealand Dollar (NZD) also weakened during last night’s trade, as simmering US-China tensions over Taiwan dented the market mood, thereby hurting the risk-sensitive ‘Kiwi’.