Loonie makes gains on strong equities and rebounding oil

Key Movers

The US Dollar Index (DXY) showed the demand for the US dollar regaining some ground leading into Friday’s North American session. This was largely due to the drop in the euro, which makes up over 57% of the weighting on the DXY. Against most currencies, the USD has lost ground following Wednesday’s Federal Reserve rate announcement and Chairman Jerome Powell’s comments. The comments led to expectations that the Fed may ease rates in 2024 and could implement the first cut as early as the spring. Later this morning, we will see if there are changes in the confidence of US purchasing managers in the S&P Purchasing Manager’s Index (PMI) data.

The EURUSD pair was down this morning as confidence in the Eurozone economy amongst purchasing managers continued to fall. The headline PMI survey number fell from 48 to 47 this month with anything under 50 pointing towards the belief that the economy is slowing.

Conversely, GBPUSD made gains after a hawkish statement from the Bank of England (BoE) yesterday. The BoE noted that it is unconvinced that their battle with sticky inflation is over.

Oil looked to rise with the benchmark West Texas Intermediate (WTI) price coming back to $72 a barrel, up $3 a barrel from earlier this week. This increase is on the back of revised demand forecasts showing that demand for crude may set records in 2024 if a global “soft landing” is achieved.