Daily Currency Update

USD - US Dollar

The USD strengthened significantly following robust US jobs data last Friday, with gains continuing into Monday after Fed Chair Powell's interview on "60 Minutes" tempered expectations for a rate cut in March. Powell emphasized the risk of premature policy action before inflation is sustainably lower. Global bond yields rose, particularly US Treasurys, while stock markets showed mixed responses despite the S&P 500 hitting a new high on Friday. Factors such as Fed repricing, USD-positive seasonal trends, and technical momentum suggest the possibility of further USD gains in the coming weeks. Key economic indicators, including Final Services and Composite PMI, and ISM Services data, are set to be released.

CAD - Canadian Dollar

Since the release of Friday's jobs data, the CAD has depreciated significantly against the USD, although the pace of losses has moderated overnight. This slowdown in losses might be due to concerns that the reduced likelihood of near-term rate cuts in the US could also affect Canada. With a week full of important data releases ahead, culminating in the jobs report on Friday, the CAD's performance remains under scrutiny. The Bank of Canada has noted slow progress on inflation, exacerbated by high wage growth. The recent uptick in USD/CAD past the low 1.34s represents a setback for the CAD, suggesting a potential return to its previous range-bound trading pattern.

EUR - Euro

The EUR declined further, hitting its lowest point since mid-December in the mid-1.07s, due to rising US rates and increasing spreads. This pressure on the EUR indicates a potential continuation of its weak performance. Final Eurozone Services and Composite PMI figures remained consistent with preliminary results (48.4 and 47.9, respectively), indicating a slight but still subdued improvement in economic activity in recent months.

GBP - British Pound

Sterling's fall below 1.26 is indicative of the USD's overall strength during the session, despite positive reports from the UK. The UK Services and Composite PMI for January were adjusted upwards to 54.3 (from 53.8) and 52.9 (from 52.5), respectively. The Composite index reached its highest level since May of the previous year, with encouraging details such as new orders being revised up to 52.2.