US Dollar recovers as Fed quashes rate cut rumours

US Dollar (USD) rebounds following hawkish Fed decision

The US Dollar (USD) slumped yesterday after the latest ADP employment figures showed a sharper-than-forecast slowdown in hiring last month.

However, the ‘Greenback’ rallied in the wake of the Federal Reserve’s interest rate decision in the evening, as the Fed firmly pushed back on expectations of a rate cut in March.

This afternoon, the latest ISM manufacturing PMI is due out. Could another deterioration in US factory activity weigh on the ‘Greenback’?

Pound (GBP) wobbles amid lack of data

The Pound (GBP) wavered without a clear direction yesterday as a lack of UK economic data left the currency rudderless.

A mixed market mood also added to Sterling’s uncertain movement, as a shifting tone impacted the increasingly risk-sensitive Pound.

Turning to today, the Bank of England’s (BoE) first policy decision of 2024 is in the spotlight. If the bank continues to push back on interest rate cut speculation, GBP could gain ground.

Euro (EUR) wavers amid mixed German data

The Euro (EUR) faced mixed movement on Wednesday, initially finding some success despite mixed German economic data. Retail sales in the country slumped in December, but January’s unemployment rate unexpectedly edged lower.

EUR then trimmed its gains in the second half of the session as a larger-than-forecast cooldown in German inflation boosted European Central Bank (ECB) rate cut bets.

Looking ahead, the January inflation rate for the wider Eurozone is out this morning. Could slowing inflation see the Euro slide?

Canadian Dollar (CAD) pulled lower by falling oil prices

The Canadian Dollar (CAD) softened on Wednesday, despite stronger-than-forecast Canadian GDP data, as weaker oil prices dragged the crude-linked ‘Loonie’ lower.

Oil prices are slipping again this morning, which could create fresh headwinds for CAD exchange rates.

Australian Dollar (AUD) slides amid risk-off mood

The risk-sensitive Australian Dollar (AUD) fell last night as the Fed’s hawkish policy announcement sparked a bearish market mood.

New Zealand Dollar (NZD) undermined by downbeat trade

The New Zealand Dollar (NZD) wavered during overnight trade. Upbeat Chinese manufacturing data lent NZD some support before the gloomy mood pulled the ‘Kiwi’ lower.

Samuel Birnie

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