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US dollar skyrockets amid souring market mood

currency-newsUS dollar skyrockets amid souring market mood
The US dollar roared higher on Wednesday. The safe-haven currency recouping the majority of its recent losses as market sentiment soured.

Meanwhile, the pound is on the back foot this morning, with GBP/EUR slipping to €1.1425 and GBP/USD ticking down to $1.1325. GBP/CAD has retreated to C$1.5403, while GBP/AUD and GBP/NZD have fallen to AU$1.7388 and NZ$1.9600, respectively.

Looking ahead, will another disappointing German factory order print push the euro lower today?

What’s been happening?

The US dollar soared through yesterday's European trading session as a prevailing risk-of mood saw investors flock to the safe-haven currency.

The upside in USD exchange rates was then reinforced by the publication of the ISM non-manufacturing PMI.

September’s index reported activity in the US service sector remained more robust than expected. Bolstering Federal Reserve rate hike expectations.

The US dollar’s strength took its toll on the euro on Wednesday due to the strong negative correlation between the pairing.

This added to pressure stemming from the Eurozone’s latest PMI release as September’s finalised figures were revised lower and revived fears the bloc is hurtling toward a recession.

At the same time, the pound stumbled yesterday in the wake of Liz Truss’s speech at the Conservative party conference.

The slump came as GBP investors appeared unconvinced she will keep an ‘iron grip’ on the UK’s finances as she railed against high taxes.

What’s coming up?

Today’s session was kicked off by the publication of Germany’s latest factory orders release. August’s figures reported a larger-than-expected contraction in order growth, leaving the euro on the back foot at the start of this session.

Potentially placing even more pressures on EUR exchange rates will be publication of the Eurozone’s latest retail sales figures, as August’s print is forecast to report a contraction in sales growth.

The pound faces an uphill battle today, after a second ratings agency threatened to downgrade the UK’s credit rating. Fitch follows S&P in cutting the outlook on the UK’s AA- investment grade credit rating, from stable to negative.

Meanwhile, if market risk appetite continues to deteriorate today, we can expect the US dollar to maintain its positive trajectory.
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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