US Dollar (USD) Soars on Strong Jobs Data
The US Dollar (USD) started yesterday’s session on the front foot, as a risk-off market mood following the US government’s credit downgrade brought the currency safe-haven flows.
Stronger-than-forecast jobs data then propelled the ‘Greenback’ higher in the afternoon. The ADP employment report printed at 324,000, well above the expected 189,000, thereby boosting Federal Reserve rate hike bets.
More strong data today could see USD climb even higher, if the ISM services PMI prints another surprise expansion in activity.
Pound (GBP) Slips amid Lack of Data
The Pound (GBP) faltered yesterday as a lack of British economic data left the increasingly risk-sensitive currency exposed to a risk-off market mood.
GBP exchange rates were further subdued as investors refrained from placing any aggressive bets on the Pound ahead of today’s Bank of England (BoE) interest rate decision.
Sterling may have the chance to recover today in the wake of the BoE meeting. A 25bps hike is priced in, but any hints at further tightening could see GBP jump.
Euro (EUR) Capped by USD Correlation
The Euro (EUR) found some success yesterday thanks to its safe-haven status amid a bearish tone in markets.
However, the single currency’s negative correlation to a stronger US Dollar capped gains.
Today, the Euro could face headwinds as the Eurozone’s latest PPI figures are forecast to show a sharp decline. Falling producer price inflation could dent European Central Bank (ECB) rate rise bets.
Canadian Dollar (CAD) Buoyed by Rise in USD
The Canadian Dollar (CAD) climbed yesterday, with the crude-linked currency shrugging off a drop in oil prices. The upside came thanks to CAD’s positive correlation with USD.
Crude prices are ticking lower this morning, which could create headwinds for the Canadian Dollar through the start of today’s session.
Australian Dollar (AUD) Hits Multi-Month Lows as Headwinds Intensify
The Australian Dollar (AUD) fell to multi-month lows overnight as the currency was hit by weaker-than-expected PMI and trade data, a confirmed contraction in retail sales, and widespread risk aversion.
New Zealand Dollar (NZD) Muted amid Gloomy Mood
The New Zealand Dollar (NZD) was also subdued overnight, although it fared better than the ‘Aussie’, as the prevailing risk-off market mood pressured the ‘Kiwi’.