The Dollar is broadly unchanged from yesterday’s close but it has been a
mixed performance for major currencies.The Australian and Kiwi Dollars have made very small gains, despite the
release overnight of weak Chinese Caixin services PMI data for January. The Kiwi Dollar has arguably benefited from stronger-than-expected labour market figures for Q4. New Zealand’s seasonally-adjusted unemployment rate fell to 4.9% from 5.3% in Q3, further dampening market expectations that the Reserve Bank of New Zealand will cut its policy rate (0.25%) and fuelling speculation as to when it may be in a position to hike rates. The NZD/USD is currently hovering near its highest level since mid-March 2018.
However, the Euro and Sterling have weakened slightly. The EUR/USD cross has edged lower to just above 1.20 at time of writing, despite a slight upward revision to the Eurozone’s January composite PMI figure and perhaps more importantly far stronger-than-expected (preliminary) CPI-inflation data. Core and headline CPI-inflation jumped to respectively 1.4% yoy and 0.9% yoy from 02% yoy and -0.3% yoy in December.
On the data front market focus is likely to now turn to the release of US
non-manufacturing ISM and ADP private-sector employment figures for January.
