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US dollar limited as market risk appetite improves

currency-newsUS dollar limited as market risk appetite improves
The US dollar weakened on Thursday amidst the prevalence of a risk-on mood, which tempered demand for the safe-haven currency before USD recovered later in the session.

Meanwhile, the pound is mixed so far this morning, with GBP/EUR subdued at €1.1753 and GBP/USD slipping at $1.3270. GBP/CAD has dipped to C$1.7023, while GBP/AUD and GBP/NZD edge higher at AU$1.8801 and NZ$1.9590, respectively.

Looking ahead the focus today will be on the latest US jobs report. Will another strong payroll print help to propel the US dollar higher?

What’s been happening?

The US dollar trended lower during yesterday’s European session, as easing concerns over the Omicron Covid variant limited the appeal of the safe-haven currency.

The publication of last week’s initial jobless claims also weighed on the ‘Greenback’ after new claims rose in the last week of November.

However, the US dollar recovered during the North American session after Federal Reserve policymakers reiterated the central bank’s more hawkish stance.

Meanwhile, the euro struggled to attract support on Thursday, following the news that Germany would be imposing new restrictions on unvaccinated people to try and halt the spread of Covid-19.

This fed into wider concerns that parts of Europe will need to impose stricter restrictions amidst a worrying rise in infections across the continent.

At the same time, the pound traded with modest gains yesterday, buoyed by the weakness of its peers as well as the news that the UK government had secured 114 million more vaccine doses to be delivered over the next two years. 

What’s coming up?

Centre stage today will be the publication of the latest US non-farm payroll reading.

November’s figures are expected to report that the US economy added another 500,000 jobs, which might bolster expectations for the Federal Reserve to start tightening its monetary policy.

For GBP investors the focus may be on the UK’s latest services PMI release, with the pound potentially facing some headwinds if November’s final reading confirms service sector activity slowed.

Likewise the Eurozone’s finalised PMI figures could also weaken the euro, should service sector activity in the bloc have been revised lower in November, in light of the additional restrictions imposed by Austria and the Netherlands towards the end of the month.
Philip McHugh

Philip McHugh

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)

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