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US dollar softens as risk-on mood offsets upbeat US data

currency-newsUS dollar softens as risk-on mood offsets upbeat US data
The US dollar trended lower yesterday, as improving risk appetite sapped demand for the safe-haven ‘greenback’.

Meanwhile, the pound is mostly rangebound so far this morning, with GBP/EUR flat at €1.1741 and GBP/USD stable at $1.3283. GBP/CAD has dipped to C$1.6976, while GBP/AUD and GBP/NZD hold steady at AU$1.8692 and NZ$1.9497, respectively.

Coming up, will another upbeat US jobless claims reading help to lift the US dollar later this afternoon?

What’s been happening?

The US dollar traded on the defensive through Wednesday’s European session, with the appeal of the safe-haven currency being undermined by a prevailing risk-off mood.

USD exchange rates remained weak through the afternoon, in spite of some positive US data releases, including a larger-than-expected increase in ADP payrolls last month, as well as a surprisingly strong ISM manufacturing PMI.

The weakness of the US dollar offered some limited support to the euro thanks to the strong negative correlation between the two. However, the single currency still broadly fell after the Eurozone’s own manufacturing PMI was revised lower in November’s finalised print.

Meanwhile, trade in the pound was mixed during yesterday’s session. While Sterling was able to advance against a weakened euro and US dollar, it struggled to replicate this success against most of its other peers, amidst ongoing Brexit uncertainty.

What’s coming up?

Looking ahead, headlines regarding the Omicron Covid variant may continue to influence currency markets today, as uncertainty remains over what impact the new strain could have on the global economic recovery.

Elsewhere, the release of the latest US initial jobless claims will be in the spotlight for USD investors. New claims dropped to a 51-year low in the week ending 20 November, and a further decline last week could help to bolster the US dollar this afternoon.

In the meantime, the Eurozone’s latest jobs report is expected to show unemployment in the bloc fell from 7.4% to 7.3% in October, potentially offering some support to the euro this morning.

Finally in the continued absence of any notable UK data, the pound may struggle to find any strong directional bias today.
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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