Pound (GBP) wavers as PMI revised lower
The pound (GBP) fluctuated in a narrow range yesterday as investors reacted to the UK’s final services PMI for January.
Although service activity accelerated to its highest level in five months, it fell short of the 21-month high suggested by the preliminary estimate.
The spotlight falls on the Bank of England (BoE) interest rate decision today. If the bank sounds cautious about the pace of future rate cuts, Sterling could strengthen. The BoE’s latest forecasts could also prompt volatility.
Euro (EUR) muted as inflation cools
The euro (EUR) was subdued yesterday as Eurozone inflation eased from 2% to 1.7% in January, while the bloc’s services PMI for the same month was revised slightly lower.
However, the common currency managed to avoid losses, with EUR investors seemingly hesitant to adjust positions ahead of today’s European Central Bank (ECB) interest rate decision.
If the ECB signals that it could consider further rate cuts, should conditions warrant looser monetary policy, then the euro could weaken.
US dollar (USD) trades sideways amid mixed data
The US dollar (USD) moved in a narrow range yesterday, with the currency shrugging off a weaker-than-forecast ADP employment change figure.
A slight uptick in US Treasury yields, paired with a better-than-forecast ISM services PMI, helped keep the ‘greenback’ afloat.
Looking ahead, the latest US jobless claims figure could impact USD today. Will a rise in new claimants see the US dollar struggle?
Canadian dollar (CAD) stumbles as PMI misses forecasts
The crude-linked Canadian dollar (CAD) slipped yesterday as falling oil prices and a weaker-than-forecast Canadian services PMI put CAD on the back foot.
Canadian data is absent from the calendar today, likely leaving the oil-sensitive ‘loonie’ to trade on crude prices.
Australian dollar (AUD) slips in risk-off trade
The Australian dollar (AUD) stumbled overnight, despite upbeat trade data, as a risk-off mood dampened AUD demand.
New Zealand dollar (NZD) softens as sentiment sours
The risk-sensitive New Zealand dollar (NZD) also fell overnight amid the cautious tone in markets.
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