Euro and Dollar Gain Some Ground on the Pound
The Pound hit a 29-month high against the US Dollar following yesterday’s report which showed that unemployment in the UK fell to 7.1%. The fall increased expectations that the Bank of England will raise interest rates before other major Central Banks.
The US Dollar regained some ground against the Pound and pushed higher against other peers as economists raised their bets that the US economy will continue to improve and benefitted from demand for safe havens in the wake of disappointing data out of China. The ‘Greenback’ looks likely to push higher later in the session if this afternoons jobless claims and manufacturing PMI reports come in strongly.
The Euro regained some ground against the Pound after a manufacturing PMI report out of Germany came in above expectations. PMI reports out of France also came in above forecasts, easing some of the concerns over the Eurozone’s second largest economy. Unemployment however remains a drag on the single currency as data out of Spain showed that the nation’s jobless rate remained at 26%.
The ‘Aussie’ took a tumble against all of its major peers after a report showed that manufacturing unexpectedly decline in China, Australia’s biggest trading partner. The data showed that the preliminary reading of China’s HSBC manufacturing purchasing managers’ index fell to a six-month low of 49.6 in January from a final reading of 50.5 in the previous month. Analysts had expected the index to tick up to 50.6. As a result the ‘Aussie’ fell to a three-year low against the US Dollar.
New Zealand Dollar
The New Zealand Dollar weakened against a number of peers due to the weaker-than-expected data out of China. The currency was also softened by data which showed that New Zealand’s business manufacturing index fell in December.
The Canadian Dollar tumbled against all of its most traded peers after the Bank of Canada’s decision to maintain interest rates at 1% and after it warned that the inflation will remain low for some time to come. The currency is likely to fall further today if retail sales data comes in below expectations.
South African Rand
The Rand is close to a five-year low against the US Dollar as workers in the mining sector went on strike. Negative strike-related headlines, coupled with pressure on commodity currencies in general from data pointing to slowing demand from key trading partner China, could see the Rand surpass last week’s low and could send it to its lowest point since October 2008.
Disclaimer: This update is provided by TorFX, a leading foreign exchange broker, its content is authorised for reuse by affiliates.
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