Positive PMI data helps support the USD

Key Movers

The EUR/USD pair continued its upward journey today amid the uptrend of business activity in the Eurozone. The ECB is expected to announce its Monetary Policy Decision tomorrow where market players are anticipating a hold to interest rates at 4.5%. Markets will also be closely watching ECB’s President Christine Lagarde’s comments tomorrow for future trajectory. EUR/USD was last seen trading at 1.0890 levels.

The GBP/USD pair rose to 1.2750 levels earlier today during the European trading session. The optimistic PMI data released from the United Kingdom were a major contributing factor supporting the GBP against the greenback. This positive PMI data indicated that the Bank of England (BoE) may refrain from loosening policy measures in February. The primary S&P Global/CIPS Services PMI for January showed expansion, reaching the 53.80 level as compared to the previous 53.40. In addition, the Manufacturing PMI improved to 47.30 from the previous figure of 46.20. GBP/USD pair was last seen trading at the 1.2745 level.

The CAD continued its decline after the release of upbeat US PMI data. The US PMI release overshadowed the Bank of Canada’s (BoC) decision to hold rates at 5%. The BoC maintained a dovish stance and hinted that it will keep treading cautiously on rate cuts as Canadian inflation is not expected to return to the BoC’s 2% target until 2025. Markets widely expected this rate hold. Inflation in Canada is expected to remain close to the 3% mark throughout this year and may dip to the 2.5% mark before the new year begins. BoC Governor Tiff Macklem highlighted that the BoC is determined to see lower inflation before putting rate cut discussions on the table. Oil prices were again under pressure, although there was a small uptick near the 75 level, establishing the fact that the current oil production cuts from the Organization of the Petroleum Exporting Countries OPEC+ seem to not be enough.