Pound (GBP) fluctuates following downward PMI adjustment
The pound (GBP) moved within a limited range yesterday as market participants digested the final UK services PMI figures for January.
Whilst the data confirmed that service sector growth reached its quickest pace in five months, the result was ultimately lower than the 21-month peak indicated by the initial estimate.
Attention now shifts to the Bank of England (BoE) interest rate announcement today. If the central bank expresses reservation regarding the speed of upcoming rate cuts, the pound may find support. The BoE’s updated economic projections may also spark price swings.
Euro (EUR) remains quiet as price growth slows
The euro (EUR) saw little movement yesterday as Eurozone inflation moderated from 2% to 1.7% in January, while the service sector PMI for the region was also subject to a modest downward revision for the same period.
Nevertheless, the single currency held its ground, as EUR traders appeared reluctant to shift their exposure before today’s European Central Bank (ECB) monetary policy meeting.
Should the ECB indicate that additional interest rate cuts remain an option if economic circumstances require further easing, the euro may face downward pressure.
US dollar (USD) moves horizontally amid mixed data
The US dollar (USD) remained largely rangebound yesterday, with the currency remaining resilient despite an ADP employment report that fell short of market expectations.
A minor rise in US Treasury yields, coupled with an ISM services PMI that surpassed forecasts, provided enough support to keep USD stable.
Moving forward, the latest US initial jobless claims data may influence the US dollar today. Will a potential increase in those filing for unemployment benefits lead to a decline for the currency?
Canadian dollar (CAD) declines after PMI disappoints
The commodity-correlated Canadian dollar (CAD) weakened yesterday as a drop in oil prices and a weaker-than-expected Canadian services PMI hindered the currency.
With no major Canadian economic releases scheduled for today, the ‘loonie’ will likely be driven by fluctuations in oil prices.
Australian dollar (AUD) falls amid cautious market atmosphere
The Australian dollar (AUD) lost ground overnight, failing to capitalise on positive trade figures as a shift toward risk-aversion weighed on demand for the currency.
New Zealand dollar (NZD) weakens as market mood deteriorates
The risk-sensitive New Zealand dollar (NZD) also retreated during the overnight session as a wary tone prevailed across the global markets.
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