US Dollar slides amid signs of cooling labour market

Australian Dollar (AUD) limited by cooling inflation

Yesterday, the Australian Dollar (AUD) fell sharply following a larger-than-expected cooldown in inflation.

In the fourth quarter of 2023, headline inflation decelerated to 4.1%, significantly down from Q3’s reading of 5.4%, prompting interest rate cut bets. However, a risk-on market impulse helped the ‘Aussie’ recover in the evening.

With market-moving data releases in short supply today, the Australian Dollar could be left rangebound. However, confirmation of a recovery in the manufacturing sector may cushion AUD.

New Zealand Dollar (NZD) rallies as business sentiment brightens

The New Zealand Dollar (NZD) strengthened yesterday, amid a notable improvement in business confidence.

ANZ found that in January, New Zealand businesses had grown more optimistic, with the index printing at 36.6. This, in tandem with cheery trade, boosted the ‘Kiwi’ above its rivals.

Today, the New Zealand Dollar may trade in a limited capacity due to a lack of data releases.

Pound (GBP) restricted as markets await BoE rate decision

Anticipation for the Bank of England’s (BoE) interest rate decision continued to mount yesterday, limiting the Pound (GBP).

However, as an increasingly risk-sensitive currency, Sterling gained ground against safer peers amid the bullish session.

The BoE announces its latest rate decision tonight. Could hawkish forward guidance lift the Pound?

Euro (EUR) wobbles amid mixed German data

The Euro (EUR) traded without a clear direction yesterday, following a mixed slate of German economic data.

While Germany’s unemployment rate fell in January, inflation cooled in the same month and retail sales slumped in December. As a result, European Central Bank (ECB) rate cut bets increased, weighing on EUR.

Later this evening, the latest Eurozone inflation data is due to print. Both the core and headline rates are expected to have cooled in January, which may weaken the Euro.

US Dollar (USD) drops as US employment slows

Disappointing ADP employment data weakened the US Dollar (USD) yesterday, as signs of a slowing labour market grew.

In January, the US private sector saw 107,000 hirings, marking a notable decline from December’s figures. Ahead of the Federal Reserve’s interest rate decision, this served to spark expectations of a dovish lean from the central bank.

Today, USD could see volatility as investors continue to respond to this morning’s policy announcement from the Fed.

Canadian Dollar (CAD) falls despite better-than-forecast economic growth

The commodity-sensitive Canadian Dollar (CAD) weakened yesterday as crude oil prices fell, negating better-than-expected GDP growth data.

Tonight, the latest Canadian preliminary manufacturing index is due to print. Softening activity in the sector may weaken the ‘Loonie’ against its rivals.

Data Releases

Feb 1st 20:00 EUR Inflation Rate (Jan) 2.8%

Feb 1st 20:00 EUR Unemployment Rate (Dec) 6.4%

Feb 1st 22:00 GBP BoE Interest Rate Decision 5.25%

Feb 1st 23:30 USD Initial Jobless Claims (27/Jan) 212,000

Feb 1st 23:45 EUR ECB President Lagarde Speech

Feb 2nd 00:30 CAD Manufacturing PMI (Jan) 45

Feb 2nd 01:00 USD ISM Manufacturing PMI (Jan) 47