US dollar firms in cautious trade

The US dollar strengthened on Monday as a cautious market mood saw skittish investors favour the safe-haven currency.

Meanwhile, trade in the pound is broadly positive so far this morning, with GBP/EUR stable at €1.1625 and GBP/USD buoyed at $1.2705. GBP/CAD has ticked up to CA$1.7127, while GBP/AUD and GBP/NZD have climbed to AU$1.9613 and NZ$2.1284, respectively.

Looking ahead, will a mixed jobs report inject some volatility into the pound today?

What’s been happening?

The US dollar opened this week’s session on the front foot, with the safe-haven currency accelerating as market risk appetite began to wane.

Sentiment appears to have soured amid fresh concerns over Chinese real estate developer Country Garden, whose collapse could have major ramifications for the world’s second largest economy.

This appreciation of the ‘greenback’ was aided by an uptick in US Treasury yields.

Meanwhile, the euro’s negative correlation with the US dollar resulted in EUR exchange rates slumping on Monday.

At the same time, the pound was trapped in a narrow range through the bulk of yesterday’s European trading session amid the absence of any UK data and the souring market mood.

What’s coming up?

Kicking off today’s session was the publication of the UK’s latest jobs data

June’s labour figures reported that domestic unemployment unexpectedly climbed from 4% to 4.2%, the highest jobless rate since the end of 2021.

However, the main focus for GBP investors was the accompanying wage growth data. A new record increase in pay in June has helped the pound to shrug off the disappointing unemployment figures as it stokes Bank of England (BoE) interest rate expectations.

Also coming up this morning is the release of Germany’s latest ZEW survey. Will another deterioration of economic sentiment in the Eurozone’s largest economy lead the euro to weaken?

Closing out today’s session will be the publication of the latest US retail sales data. July’s figures are expected to report an uptick in consumer spending. Which may extend support to the US dollar later this afternoon.