Pound (GBP) bolstered by wider weakness in FX market
The pound (GBP) trended broadly higher at the end of last week, as it was able to capitalise on the weakness of many of its peers.
Supporting these gains was some spillover from rising optimism in Europe.
UK data is in short supply at the start of this week, which could leave the pound with limited impetus for movement.
Euro (EUR) bolstered by new EU defence fund
The euro (EUR) continued to strengthen on Friday, leading the single currency to close the week with its strongest performance in 16 years.
The upside in EUR exchange rates was driven in large part by the announcement of a new €800bn European defence spending plan, which helped to sustain the recent optimism in Europe.
Looking ahead, the euro may extend these gains this morning, after data showed a larger-than-expected rebound in German industrial production in January.
US dollar (USD) slides as US payrolls fall short
The US dollar (USD) stumbled at the end of last week as the latest US payroll figures reported the US economy added 151,000 jobs last month, falling short of the 160,000 forecast, while unemployment unexpectedly rose to 4.1%.
The underwhelming jobs data saw the market odds for a Federal Reserve interest rate cut in May rise to 50%, which dragged on the ‘greenback’.
Turning to this week, the trajectory for the US dollar will likely depend on US economic sentiment. If investors continue to raise concerns over a potential recession, USD exchange rates may continue to weaken.
Canadian dollar (CAD) slumps on disappointing jobs data
The Canadian dollar (CAD) also faced pressure from domestic employment data on Friday, with CAD investors left dismayed after the economy only added 1,100 jobs last month.
Looking ahead, the commodity-sensitive ‘loonie’ may remain on the back foot at the start of this week, if oil prices continue to soften.
Australian dollar (AUD) muted following worrying Chinese inflation figures
The Australian dollar (AUD) was subdued through Monday’s Asian trading session, after data from China showed Australia’s main trading partner slipped back into deflation last month.
New Zealand dollar (NZD) buoyed by risk-on flows
The New Zealand dollar (NZD) drifted higher in overnight trade, with the risk-sensitive ‘kiwi’ supported by a modest improvement in market sentiment.
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