US dollar retreats as tariff fears ease

Pound (GBP) subdued as UK services PMI revised lower

The pound (GBP) was left muted yesterday as GBP investors digested the UK’s latest services PMI.

January’s finalised index saw growth in the vital services sector revised lower and revived fears the UK is facing a period of stagflation.

Coming up, the Bank of England (BoE) will deliver its latest interest rate decision today. With a 25bps rate cut largely priced in, any resulting movement will be dependent on the BoE’s forward guidance.

Euro (EUR) firms amid USD weakness

The euro (EUR) edged higher on Wednesday, supported by its strong negative correlation with the US dollar (USD).

Tempering these gains, however, were concerns over the strength of the Eurozone economy, with investors fearing the bloc could be hit hard by fresh shocks in the energy market.

Germany publishes its latest factory orders data later today. Could a rebound in order growth at the end of 2024 help the euro to consolidate its recent recovery?

US dollar (USD) slides as trade war fears wane

The US dollar retreated through yesterday’s session as fading concerns over Donald Trump’s tariffs limited demand for safe-haven assets.

Compounding the dollar’s losses was the publication of the latest ISM services PMI, which reported a much sharper-than-expected slowdown in US service sector growth.

Barring another shift from Trump regarding his stance on tariffs, the US dollar is likely to remain muted today as USD investors away the publication of key US employment figures at the end of the week.

Canadian dollar (CAD) muted amid falling oil prices

The Canadian dollar (CAD) faced headwinds on Wednesday as the appeal of the commodity-linked currency was dented by a softening of oil prices.

If oil prices continue to weaken, we may see the ‘loonie’ remain under pressure through today’s session.

Australian dollar (AUD) stumbles amid shrinking trade surplus

The Australian dollar (AUD) ticked lower overnight on Wednesday as domestic data showed Australia’s trade surplus shrank to a three-month low in December, amid a sharp slowing of export growth.

New Zealand dollar (NZD) dips in cautious trade

The New Zealand dollar (NZD) also retreated in overnight trade as a deteriorating market mood limited the appeal of the risk-sensitive ‘kiwi’.

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