US Dollar (USD) Firms amid Risk-Off Trade
The US Dollar (USD) closed the week on a positive note, with the safe-haven ‘Greenback’ benefitting from a pullback in risk appetite.
Federal Reserve rate hike bets also supported USD exchange rates, with tailwinds carrying over from Thursday’s better-than-forecast employment data.
As with the UK and the Eurozone, economists expect the US PMIs this afternoon to show slowing activity. Could weaker readings in some of the world’s largest economies sour the market mood, thereby boosting USD?
Pound (GBP) Directionless despite Upbeat Sales
The Pound (GBP) was mixed on Friday, firming against its weaker peers but ceding ground elsewhere, despite stronger-than-forecast UK retail sales data.
Sales growth of 0.7%, above the expected 0.2%, was not enough to see GBP strengthen as markets continued to pare back Bank of England (BoE) interest rate rise bets.
This morning, the latest PMI surveys are in the spotlight. Will an ongoing decline in British private sector activity see the Pound remain on the defensive?
Euro (EUR) Limited by USD Correlation
The Euro (EUR) found some success at the end of the week as a cautious mood saw the safer single currency firm against its riskier peers.
However, the Euro’s negative correlation with a stronger US Dollar severely capped EUR’s upside, as did a lack of Eurozone economic data.
The Eurozone PMIs are also due out this morning. Could another dire reading see the common currency slide?
Canadian Dollar (CAD) Slides as Sales Disappoint
The Canadian Dollar (CAD) took a hit on Friday following disappointing Canadian retail sales data. Sales slowed sharply from 1% to 0.2%, versus expectations of 0.5% growth.
Turning to today’s trade, a lack of notable data could see oil prices drive the commodity-linked ‘Loonie’. If crude prices stay firm, CAD could enjoy support.
Australian Dollar (AUD) Wobbles Lower amid Mixed PMIs
The Australian Dollar (AUD) fluctuated slightly lower overnight following mixed PMI results. The manufacturing survey beat forecasts, although it still showed a decline. The services PMI, however, was weaker than expected.
New Zealand Dollar (NZD) Rangebound as Trade Data Falls Flat
The New Zealand Dollar (NZD) traded flat at near multi-week lows last night as New Zealand’s latest balance of trade report failed to prompt much movement.