Pound rallies amid service sector growth

Australian Dollar (AUD) restricted by easing inflationary pressures

On Wednesday, the Australian Dollar (AUD) remained afloat thanks to elevated risk appetite during the session.
However, the latest preliminary Australian PMIs suggested that inflationary pressures in the country had eased significantly. This sparked bets on coming rate cuts from the Reserve Bank of Australia (RBA), capping AUD’s movements.
This morning, the RBA is set to release its latest bulletin. If this contains hawkish comments, the ‘Aussie’ could strengthen.

New Zealand Dollar (NZD) rallies amid risk-on trade

Although new data showed that New Zealand inflation continued to cool at the end of 2023, the New Zealand Dollar (NZD) managed to gain ground yesterday amid cheery trade.
Amid reports of a possible ceasefire agreement between Israel and Hamas, and news of economic stimulus measures from China, market risk appetite improved.
Turning to today’s session, the ‘Kiwi’ may endure listless trade amid a short supply of data.

Pound (GBP) boosted by surprise UK service sector expansion

Following a surprise acceleration of growth in the UK service sector, the Pound (GBP) rocketed against most major peers yesterday.
While GBP exchange rates did trim some gains over the course of the session, signs of strength in the vital sector soothed recession anxieties.
Data releases are in short supply today, which may lead to muted trade for Sterling over the session.

Euro (EUR) stumbles following downbeat PMIs

The Euro (EUR) slipped at the start of Wednesday’s European session after the latest Eurozone PMIs pointed to an ongoing contraction in business activity.

However, a weaker US Dollar (USD) helped EUR regain ground and rise against some of its weaker rivals later on due to the currencies’ negative correlation.
The European Central Bank (ECB) is set to deliver its latest interest rate decision tonight. While no change is expected, if the ECB maintains its hawkish stance regarding rate cuts the Euro could strengthen.

US Dollar (USD) blighted by cheery trade

Due to upbeat trading conditions, the safe-haven US Dollar struggled to attract much support from investors yesterday.
However, the ‘Greenback’ may have been cushioned from steeper losses later in the session by forecast-beating preliminary PMIs. The US service sector grew significantly more than expected in January, signalling robust economic activity.
Tonight, the latest US GDP data is due to print. Economists anticipate a sharp deceleration in growth from 4.9% to 2%, which could lead to volatile trade.

Canadian Dollar (CAD) slides as BoC signals peak of interest rates

The Canadian Dollar (CAD) slipped on Wednesday, as the Bank of Canada (BoC) left interest rates unchanged. Furthermore, the bank indicated its tightening cycle was at an end, further denting CAD.
Due to a short supply of macroeconomic data, continued analysis of the BoC’s forward guidance may bring volatility to the ‘Loonie’ today.

Data Releases

Jan 25th 10:30 AUD RBA Bulletin
Jan 25th 23:15 EUR ECB Interest Rate Decision 4.5%
Jan 25th 23:30 USD GDP Growth Rate (Q4) 2%
Jan 25th 23:45 EUR ECB Press Conference