Pound (GBP) enjoys expansion in UK factory activity
The pound (GBP) enjoyed some support yesterday after the UK’s final manufacturing PMI was revised up from 49.9 to 50.3 to show growth in factory activity last month.
Although the score was only marginally above the 50-point mark that separates expansion from contraction, it was still the first positive PMI reading since July 2022.
Looking ahead, Sterling could struggle to find a clear direction during today’s session as GBP data is thin on the ground.
Euro (EUR) capped by cooling German inflation
The euro (EUR) firmed against its weaker rivals on Tuesday, with the single currency benefitting from its strong negative correlation with a declining US dollar (USD).
However, a cooldown in German inflation put a lid on the euro’s gains, keeping alive the prospect of an interest rate cut from the European Central Bank (ECB) later this month.
Today, the Eurozone consumer price index is in the spotlight. Unlike German inflation, price pressures in the wider euro area are expected to have held steady last month. This could boost EUR exchange rates.
US dollar (USD) undermined by profit-taking
The US dollar fell yesterday amid profit-taking, as investors cashed in on the currency after it hit its highest level since 14 November.
The latest US jobs openings figure failed to lift the ‘greenback’ in the afternoon, despite exceeding forecasts. A downward revision to the previous month’s figure offset any potential upside for USD.
Turning to today’s session, the ISM services PMI is in focus. If the data exceeds forecasts, as Monday’s manufacturing PMI did, then the US dollar could rally.
Canadian dollar (CAD) dragged down by USD correlation
The Canadian dollar (CAD) fell yesterday as CAD was pulled lower by its positive trading relationship with the US dollar.
Canada’s services PMI later today could impact the ‘loonie’, with another weak reading potentially weighing on the currency.
Australian dollar (AUD) wavers amid anxious mood
The Australian dollar (AUD) fluctuated overnight as positive data from Australia and China was offset by a downbeat market mood.
New Zealand dollar (NZD) zigzags alongside AUD
The New Zealand dollar (NZD) traded in tandem with the ‘Aussie’ last night, as a lack of NZD data left the currency to be driven by its positive correlation with AUD.