US Dollar (USD) Rallies as Markets Price in More Fed Hikes
After falling at the start of yesterday’s session, the US Dollar (USD) then surged after the ADP employment change figures and ISM services PMI smashed forecasts.
The strong data left markets scrambling to price in more aggressive action from the Federal Reserve, which saw USD jump higher and sparked widespread risk aversion. However, USD struggled to hold its gains against its stronger peers.
Looking ahead, the non-farm payrolls report is in the spotlight. If it exceeds forecasts, as the ADP report did, then USD could surge higher.
Pound (GBP) Rises amid Rate Hike Speculation
The Pound (GBP) managed to shake off recession worries yesterday to climb sharply higher amid bets on more Bank of England (BoE) interest rate rises.
UK government bond yields – which often indicate BoE bets – hit 15-year highs, pulling the Pound up with them.
Turning to today’s session, Sterling closes the week with UK economic data still thin on the ground. Could BoE bets keep the Pound afloat through to the end of trade?
Euro (EUR) Firms following Upbeat Factory Orders
Having weakened overnight, the Euro (EUR) managed to recover against many of its peers through yesterday’s European session.
A surprisingly strong recovery in German factory orders gave EUR an initial boost. However, disappointing Eurozone retail sales may have capped the upside, as sales growth stalled in May.
German industrial production unexpectedly contracted this morning. This could begin to pressure the Euro as the session progresses.
Canadian Dollar (CAD) Slumps as Oil Prices Plunge
The Canadian Dollar (CAD) initially weakened yesterday, seemingly dragged down by its positive correlation with USD. Later in the session a slump in oil prices pulled the crude-linked ‘Loonie’ even lower.
Coming up, Canadian employment data is in focus this afternoon. Another rise in the jobless rate could see CAD slide further.
Australian Dollar (AUD) Licks Wounds after Selloff
The Australian Dollar (AUD) crawled higher overnight, after suffering a huge selloff during yesterday’s European session. The ‘Aussie’ seemed to recoup some losses after entering oversold conditions.
New Zealand Dollar (NZD) Firms following Sharp Drop
Likewise, the New Zealand Dollar (NZD) regained some of the ground lost after plunging yesterday afternoon.