Pound News: Mixed UK Services PMI Limits GBP Demand
Although December’s UK services PMI showed a modest uptick on the month this failed to encourage any particular support for Pound (GBP) exchange rates on Thursday.
The underlying details of the report were not overly encouraging, with a decline in business sentiment suggesting that the UK economy may struggle to maintain its current momentum over the coming year.
Confidence in the Pound is likely to remain limited in the near term, as anticipation continues to build for Theresa May’s anticipated cabinet reshuffle.
Euro News: Eurozone Growth Hits Seven Year High
The Pound to Euro (GBP/EUR) exchange rate returned to a downtrend on the back of the finalised Eurozone services and composite PMIs.
As the Eurozone economy demonstrated its strongest growth since 2011 in December, the appeal of the Euro (EUR) naturally increased, especially as the domestic outlook is seen to be similarly rosy.
Volatility could be in store for the single currency, however, with the release of the latest Eurozone consumer price index, which may highlight the continued weakness of domestic inflationary pressure.
US Dollar News: USD Exchange Rates Remain Under Pressure Ahead of Jobs Data
Market reaction to the Federal Open Market Committee’s (FOMC) December meeting minutes proved rather lacklustre, leaving the US Dollar (USD) on a weaker footing.
With policymakers expressing continued uncertainty over the long-term impact of the Trump administration’s tax reforms and the inflationary outlook the prospect of an imminent interest rate hike diminished.
However, if the non-farm payrolls report indicates that US wage growth is starting to pick up this could see the Pound to US Dollar (GBP/USD) exchange rate reversing some of its gains.
Canadian Dollar News: Rising Producer Prices Failed to Boost CAD
Even though market risk appetite remained strong on Thursday the Canadian Dollar (CAD) was unable to find any traction against many of its rivals.
A solid uptick in November’s producer price index data was not enough to shore up CAD exchange rates, even though this suggests that inflationary pressure is still building within the Canadian economy.
Demand for the Canadian Dollar is likely to weaken further today, with forecasts pointing towards the unemployment rate rising from 5.9% to 6.0%.
Australian Dollar News: Fed Minutes Benefit AUD Exchange Rates
Further pressure was heaped on the Pound to Australian Dollar (GBP/AUD) exchange rate as the Australian service sector demonstrated modest growth on the month.
The less hawkish nature of the latest Federal Reserve meeting minutes also helped to bolster the Australian Dollar (AUD), pointing towards a slower pace of policy divergence between the Fed and the Reserve Bank of Australia (RBA).
Even so, bullish US employment data could see the GBP/AUD returning to a stronger footing ahead of the weekend.
New Zealand Dollar News: NZD Supported By Market Risk Appetite
The Pound to New Zealand Dollar (GBP/NZD) exchange rate came under considerable pressure on Thursday, even in the absence of any New Zealand data.
Confidence in the New Zealand Dollar (NZD) improved on the back of the Fed’s uninspiring meeting minutes, with investors inclined to buy back into the softer antipodean currency after its recent run of softness.
Fresh weakness may be in store for NZD exchange rates, however, if today’s US data prompts markets to return to a more risk averse state of mind.
Friday, 05 January 2018
10:00 Eurozone Consumer Price Index
13:30 Canadian Unemployment Rate
13:30 US Change in Non-Farm Payrolls
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