Pound (GBP) directionless after services PMI
The pound (GBP) traded in mixed fashion yesterday as investors digested the UK’s final services PMI for February.
While the survey pointed to persistent services inflation – something that may make the Bank of England (BoE) wary about cutting interest rates too quickly – it also revealed job losses within the sector, fuelling concerns about the health of the UK labour market.
With the UK economic calendar quiet today, Sterling may struggle to establish a clear trajectory.
Euro (EUR) lacks momentum despite historic unemployment low
The euro (EUR) also moved without a clear trend yesterday as record-low Eurozone unemployment was offset by rising tensions between the EU and US.
After President Donald Trump threatened to halt trade with Spain over its stance on the war in Iran, the EU warned it could respond if any of its member states were targeted by US trade action.
Looking ahead, a predicted rebound in Eurozone retail sales for January could lend the single currency some support. EUR investors will also watch the European Central Bank’s (ECB) latest policy minutes for fresh direction.
US dollar (USD) slips as risk appetite improves
The US dollar (USD) edged lower yesterday as its recent safe-haven rally lost some momentum.
Reports suggesting Iranian operatives had contacted the CIA to discuss potential terms to end the conflict brought a measure of cautious relief to markets.
Today, a projected rise in US jobless claims for last week could weigh on USD demand. However, if risk aversion returns, the safe-haven currency may still find support.
Canadian dollar (CAD) softens as oil rally fades
The oil-linked Canadian dollar (CAD) pulled back from recent highs yesterday as crude prices eased after their sharp surge earlier in the week.
With no major Canadian data scheduled today, oil price movements may again drive the ‘loonie’. If crude prices begin climbing again, CAD could regain some support.
Australian dollar (AUD) pressured by renewed market caution
The Australian dollar (AUD) weakened overnight as investor sentiment deteriorated amid the ongoing Middle East crisis, reducing the appeal of the risk-sensitive currency.
New Zealand dollar (NZD) dips in subdued trading
The New Zealand dollar (NZD) also trended lower during the Asian session as a cautious market mood weighed on risk-sensitive currencies.
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