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US dollar soars to two-month high on bumper job growth

currency-newsUS dollar soars to two-month high on bumper job growth
The US dollar surged in the middle of the week, briefly striking a new two-month high in response to some upbeat US data.

Turning to the pound this morning we can see it is mostly rangebound, with GBP/EUR flat at €1.1803, GBP/USD muted at $1.2987, and GBP/CAD subdued at C$1.7246, while GBP/AUD and GBP/NZD hold steady at AU$1.9240 and NZ$2.0086 respectively.

Coming up, will we see the euro slump this morning following a sharp contraction in German factory orders last month?

What’s been happening?

The US dollar roared higher yesterday as USD investors welcomed some impressive US data.

This was mostly focused around the ADP employment report, which revealed the US private sector added 291,000 jobs last month, the largest expansion in jobs since 2015 and boding well for the more-influential non-farm payroll report at the end of the week.

Meanwhile, the pound appeared to be off to a strong start on Wednesday, rallying in the morning on the back of the UK’s final PMI figures for January.

These revealed a sharp uptick in service sector activity last month, with the services index rocketing up from 50 to 53.9, marking the vital sector’s largest expansion since September 2018.

However, Sterling was unable to sustain theses gains, quickly retreating in the afternoon amid lingering Brexit uncertainty.

The euro also closed yesterday’s session on the back foot, with the single currency being knocked by an extremely sharp drop in Eurozone retail sales growth in December.

What’s coming up?

Germany’s latest factory order figures will be in focus today, where a sizable contraction in order growth last month is likely to keep pressure on the euro.

EUR investors will also keep an eye on European Central Bank (ECB) President Christine Lagarde as they look for any snippets on monetary policy when she speaks later this morning.

For USD investors the focus will be the Federal Reserve’s Richard Kaplan as they hope he may offer some hints on the bank’s upcoming policy plans.

Finally, the absence of any notable economic data could weigh on the pound today as it leaves markets to turn their focus back to Brexit amid concerns Boris Johnson’s hardline stance towards trade could result in a no-deal Brexit later this year.
 
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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