Pound (GBP) Climbs as BoE Strikes Hawkish Tone
The Pound (GBP) strengthened yesterday after the Bank of England (BoE) struck a hawkish tone at its final interest rate decision of 2023.
Although the bank left rates unchanged, as expected, policymakers pushed back against speculation of coming rate cuts.
The UK’s preliminary PMI results for December are in the spotlight this morning. Another expansion in service sector activity could see GBP leap higher.
Euro (EUR) Buoyed by ECB Decision
The European Central Bank (ECB) also delivered its rate decision yesterday. Policymakers did not discuss rate cuts, according to ECB President Christine Lagarde, which boosted the Euro (EUR).
The common currency also benefitted from its strong negative correlation with the US Dollar (USD), as the ‘Greenback’ remained weak following the Federal Reserve decision.
The Eurozone PMI surveys are also out this morning. Will a continued contraction in business activity see EUR exchange rates slide?
US Dollar (USD) Weak following Fed Announcement
The US Dollar remained on the back foot yesterday, licking its wounds following the Federal Reserve’s dovish rate decision on Wednesday.
An unexpected recovery in US retail sales in the afternoon only seemed to add to USD’s losses. The upbeat data cheered markets, piling fresh pressure on the safe-haven ‘Greenback’.
Looking ahead, this afternoon brings the publication of the latest US PMIs. Could weak readings see USD fall further?
Canadian Dollar (CAD) Dragged Down by USD Correlation
The Canadian Dollar (CAD) fell against its stronger rivals yesterday due to CAD’s positive correlation with USD. However, soaring oil prices may have cushioned the crude-linked currency’s losses.
Later this evening, Bank of Canada (BoC) Governor Tiff Macklem is due to speak. Any dovish comments could dent CAD.
Australian Dollar (AUD) Flat following Mixed PMIs
The Australian Dollar (AUD) traded sideways last night following mixed Australian data. While the country’s services PMI beat forecasts, the manufacturing survey fell short of expectations.
New Zealand Dollar (NZD) Rangebound despite Positive Factory Data
The New Zealand Dollar (NZD) also wobbled last night, despite New Zealand’s manufacturing PMI printing above expectations. A tepid market mood kept the risk-sensitive ‘Kiwi’ in a narrow range.