Daily Currency Update

USD - US Dollar

The US dollar is mixed to slightly stronger as markets are starting to stabilize following earlier week's volatility. European stocks are trading higher, and there has been a modest rise in Asian stocks, while US equity futures are positive. US 10-year yields remain close to the recent high at 4.20%, with intraday trends largely following other major bond markets. Commodities, such as crude oil and iron ore, are showing a mix of slight firmness. The July US Non-Farm Payrolls (NFP) data is expected to indicate a 200,000 increase, slightly lower than the previous month's 209,000 and below the three-month moving average. There is a "whisper" number among market participants suggesting an anticipated gain of 221,000. Wage growth is projected to slow down, which is something policymakers are likely to observe closely. Although the USD has performed well throughout the week, its gains appear to be moderating and could possibly reverse based on chart analysis. A lower close today would have a negative technical impact on the Dollar Index (DXY) and may indicate the emergence of some corrective pressure.

CAD - Canadian Dollar

The CAD is showing very little movement today, holding near its session and weekly high. It is expected that Canadian employment will increase by 25,000 jobs in July, following the strong rise of 59,900 jobs in June. Hourly wages are forecasted to experience a slight increase of 4.1%, compared to the 3.9% seen in June. As it's a long weekend in Canada, domestic business activity might slow down quickly after the morning's data releases. Despite this, stable risk appetite and a rebound in crude oil prices suggest that the USD/CAD's upper 1.33s range should remain relatively strong. If the data surprises positively, the still undervalued CAD might find some support, at least to some extent.

EUR - Euro

During the overnight period, EUR/USD remained within a narrow range and is commencing the day with little change against the USD. In a surprising development, German Factory Orders experienced a substantial 7.0% increase in June, but this data had no significant impact on the EUR. The rise partly counters an unusually sharp decline in orders witnessed in March. However, when observing the 3-month over 3-month trend, it reveals that orders are only up by 0.2%, which may be a more accurate representation of the relatively weak state of the industrial sector.

GBP - British Pound

The GBP is consolidating the gains realized from the lower 1.26 zone observed yesterday, subsequent to the Bank of England (BoE) raising the benchmark interest rate by 25 basis points. The BoE's announcement indicated that further rate increases might be necessary, and it made it clear that the policy would likely remain elevated for a considerable period to tackle inflation. This stance aligns with the overall sentiment in the market. There is no market expectation of rate cuts in the UK over the next 12 months. In contrast, some minor easing is anticipated for the European Central Bank (ECB) during the same period, and the US swaps curve indicates around a 50-basis-point decrease in rates. While the UK/US spreads have narrowed since early July, they still favor the GBP, which should provide support for the currency.