The US dollar strengthened on Thursday as USD investors cheered the release of some stronger-than-expected US economic releases.
Meanwhile, Sterling is mostly flat this morning, with GBP/EUR climbing to €1.1092 but GBP/USD is rangebound at $1.3566. GBP/CAD is muted at C$1.7225, while GBP/AUD and GBP/NZD hold steady at AU$1.7486 and NZ$1.8715, respectively.
In the spotlight today will no doubt be the latest US payroll release, where a slowing of employment growth may sour market sentiment today.
What’s been happening?The pound edged higher through yesterday’s trading session, with the news the UK military will assist in the coronavirus vaccine rollout being welcomed by GBP investors, who hope it will accelerate the massive endeavour and allow for England to exit lockdown before March.
However, these gains were tempered somewhat by growing speculation that the Bank of England (BoE) is likely to need to ease its monetary policy further in response to the pressure on the UK economy from the new lockdown.
At the same time, the US dollar came out on top yesterday, with USD exchange rates benefitting from a bump in US bond yields amidst optimism for greater US stimulus following the Democrat’s victory in Georgia’s Senate runoffs.
This uptick in the US dollar was bolstered further by the release of the latest ISM non-manufacturing PMI as it reported the US service sector expanded at a faster-than-expected pace last month.
The euro, meanwhile, trended lower on Thursday, dented by the USD recovery as well as some disappointing EUR data releases, with the Eurozone’s latest consumer price index and retail sales figures both printing below expectations.
What’s coming up?Kicking off today’s session was the release of Germany’s latest industrial production figures, which reported a surprise expansion in November, potentially offering some support to the euro this morning.
Also influencing the euro today may be the Eurozone’s latest jobs report, where an uptick in unemployment in the bloc in November could undermine the single currency.
In the UK there aren’t any releases of note on today’s data calendar, which will likely result in GBP investors remaining focused on the UK’s coronavirus situation, with the pound poised to give ground if cases continue to rise at an alarming rate.
Closing out this week’s session we have the release of the always influential US non-farm payroll report.
Economists are forecasting US employment growth will have slowed sharply in December, which if correct could sour market risk appetite, and buoy the appeal of the safe-haven US dollar.
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)