Daily Currency Update

USD - US Dollar

The USD is strengthening ahead of today's NFP report, reaching its highest level since mid-December. Bond yields are up across major markets, with expectations of central bank easing in Q1 decreasing. Crude prices are slightly higher. A large financial insolvency in China has contributed to market caution in Europe. US jobs data this week has been positive, leading to higher expectations for NFP (estimated at 188k by Bloomberg). A result above the consensus of 174k might significantly boost the USD. Market expectations are high, but a strong payroll report could push the USD towards the 104 area, aligning with its fair value estimate of 103.50.

CAD - Canadian Dollar

The CAD is slightly weaker but holding up better than most currencies against the USD before today's data release. Canada's job report is expected to show a modest increase in December jobs (15k) and a slight rise in unemployment to 5.9%. Wages are projected to stay high at +5.4%, concerning the Bank of Canada. While bets on BoC easing have reduced, boosting CAD, the USD is expected to gain in the coming weeks due to correction from last year's sell-off and seasonal factors. Observe USD/CAD trends.

EUR - Euro

Eurozone CPI increased by 0.2% in December, resulting in a yearly rise of 2.9%, up from November's 2.4%. Core inflation slightly decreased to 3.4% year-over-year. This increase was anticipated due to the removal of energy subsidies. Stronger Eurozone data this week, including inflation and PMIs, have raised interest rates and slightly reduced ECB easing expectations. However, short-term spreads against the USD have stayed stable, offering limited support to the EUR against the USD's broader rebound.

GBP - British Pound

Sterling has weakened, similar to other major European currencies. The UK's December Construction PMI improved slightly to 46.8 from November's 45.5, exceeding expectations. While overall data is still weak, there are signs of stabilization in the construction sector as the UK's rate cycle peaks and input costs begin to decrease.