US dollar soars as US payrolls impress

Pound (GBP) retreats amid renewed debt concerns

The pound (GBP) came under renewed selling pressure at the end of last week, as UK borrowing costs began to rise again.

This revived concerns over the UK’s fiscal strength. The rising cost of borrowing could undermine economic growth by forcing the UK government to raise taxes or cut spending.

Expect Sterling to remain on the defensive this week if the UK’s bond crisis persists.

Euro (EUR) pressured by USD strength

The euro (EUR) struggled to attract support on Friday as the currency was undermined by its strong negative correlation with the US dollar (USD).

Adding to the pressure on the single currency was growing confidence that the European Central Bank (ECB) will deliver another interest rate cut later this month.

Eurozone data is thin on the ground today, potentially leaving the euro to trade without direction today.

US dollar (USD) bolstered by robust payroll print

The US dollar closed last week’s session on a high note, following the release of the latest US non farm payroll figures.

Friday’s figures reported the US economy added 256,000 jobs in December, smashing forecasts for an increase of 160,000, and trimming Federal Reserve interest rate cut bets.

Looking ahead, the momentum from the payroll figures may carry over into the start of this week’s session as USD investors continue to reprice their expectations for the Fed.

Canadian dollar (CAD) climbs as unemployment falls

The Canadian dollar (CAD) also strengthened on Friday as the currency was underpinned by a surprise decline in domestic unemployment last month, in addition to a sharp rise in oil prices.

While Canadian data is in short supply today, the ‘loonie’ may be able to extend its gains if oil prices continue to accelerate.

Australian dollar (AUD) flat despite upbeat Chinese trade data

The Australian dollar (AUD) traded in a narrow range through today’s Asian trading session. While the ‘Aussie’ was supported by positive trade figures coming out of China, the currency’s upside potential was capped by risk-off flows.

New Zealand dollar (NZD) muted in mixed trade

The New Zealand dollar (NZD) also wavered in overnight trade, amid the cautious market mood.

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