Daily Currency Update

USD - US Dollar

The USD closed 2023 slightly above its December 28th low, the weakest point since July, marking a 4% annual loss following two strong years. During the holidays, USD activity was minimal, but it recently surged amid global risk aversion. The USD's decline in the latter half of 2023 appears oversold, and stabilizing spreads may reduce selling pressure. Seasonal trends suggest potential USD gains in Q1. With USD buyers reemerging after the late 2023 downturn, the outlook is cautiously optimistic. This week is data-heavy, featuring US and Canadian employment figures on Friday and Manufacturing PMI from the US, Mexico, and Canada, along with US Construction Spending and Mexican Remittances data today.

CAD - Canadian Dollar

CAD reverses from sub-1.32 level. The narrowing of spreads have bolstered the CAD's recent gains, potentially offering more support in the short term. It's important to note that crude prices have surged today due to tensions in the Middle East. However, the CAD's surge against the USD appears somewhat overextended, and it might face some corrective losses in the coming weeks as the USD recovers from its oversold state. Observe USD/CAD trends.

EUR - Euro

EUR/USD has fallen by 0.6% in the current session, with the USD showing strength across the board. Data from the Eurozone indicated revised increases in December's German and French Manufacturing PMI, resulting in a raised overall Eurozone index to 44.4 from 44.2. Despite the figures being relatively low, this represents the highest level since May.

GBP - British Pound

The UK's December Manufacturing PMI was adjusted slightly downwards from an initial estimate of 46.4 to 46.2, a decrease of one point from November. However, data on New Orders saw a slight upward revision. In the coming weeks, the political situation in the UK may attract increased attention from the markets. Reports in the UK media during the holiday period have heightened speculation that the Conservative government might consider an early election, potentially in May, if the situation (such as polling results) improves following the March budget.