US Dollar (USD) surges in bearish trade
The US Dollar got off to a roaring start this year as a cautious mood saw skittish investors favour the safe-haven currency.
These gains were reinforced by a sharp uptick in US Treasury yields, in advance of some high-impact US data releases later in the week.
The focus for USD investors will now turn to the publication of the minutes from the Federal Reserve’s latest policy meeting. Expect to see the US Dollar plummet later this evening if the minutes show that Fed policymakers are open to rate cuts in the near future.
Pound (GBP) knocked by weak manufacturing PMI
The Pound (GBP) faltered during yesterday’s session in the wake of the latest UK manufacturing PMI.
December’s finalised figures reported growth in the UK factory was actually a little weaker than initially thought, which did little to ease UK recession fears.
Looking ahead, the Pound’s upside potential looks limited, as UK recession fears are likely to continue to stoke Bank of England (BoE) interest rate cut speculation.
Euro (EUR) undermined by USD strength
Trade in the Euro (EUR) was mixed on Tuesday. The single currency faced headwinds as a result of its strong negative correlation with the US Dollar (USD).
However, an upwardly revised Eurozone manufacturing PMI offered some modest support to EUR exchange rates.
Coming up, the release of Germany’s latest jobs report could drag on the Euro later this morning, if December’s figures report another rise in unemployment.
Canadian Dollar (CAD) buoyed by rising oil prices
The commodity-linked Canadian Dollar (CAD) rose in tandem with oil prices on Tuesday, amid concern over attacks on vessels in the Red Sea.
If oil prices continue to rise, the ‘Loonie’ may extend these gains through today’s session.
Australian Dollar (AUD) muted in cautious trade
The Australian Dollar (AUD) was mostly subdued overnight on Tuesday as a cautious mood limited demand for the risk-sensitive currency.
New Zealand Dollar (NZD) firms despite bearish sentiment
The New Zealand Dollar (NZD) trended broadly higher in overnight trade. Although a lack of a clear catalyst for the move, may see the ‘Kiwi’ struggle to consolidate these gains during today’s European trading session.