Sterling lost ground with fresh doubts whether the Bank of England would engage in an aggressive interest rate cycle.

The USD regained some ground following the much stronger than expected US jobs data with some renewed speculation of a 50 basis-point rate hike in March. EURUSD was subjected to a correction from 2-month highs but found support above 1.1400 and settled around 1.1430 on Monday.

Higher US bond yields supported the dollar against the YEN and CHF. EUR/CHF posted 3-month highs close to 1.0600 before fading slightly.

Sterling lost ground with fresh doubts whether the Bank of England would engage in an aggressive interest rate cycle. GBP/EUR posted a 6-week low below 1.1820.

Commodity currencies posted notable net losses despite strength in commodity prices, although AUD/USD recovered to near 0.7100 on Monday. EUR/AUD posted 4-month highs.

The Canadian dollar was hampered by a weaker than expected jobs report, but USD/CAD retreated to below 1.2750 as oil prices remained a strong tone.

US non-farm payrolls increased 467,000 for January, substantially above consensus forecasts of 150,000, and there was a large upward revision to 510,000 for December compared with the original figure of 199,000.

There was a small increase in manufacturing jobs for the month while there was a reported increase in leisure and hospitality jobs of over 150,000 compared with expectations that the Omicron variant would lead to a decline on the month.

The unemployment rate edged higher to 4.0% from 3.9% and marginally above expectations, although this was due to a significant increase in the participation rate and the household survey recorded an employment increase of over 1.0 million on the month.

The data indicated a tight labour market and the strong overall release provided net support to the dollar.

US Average hourly earnings increased 0.7% on the month compared with expectations of a 0.5% gain with a year-on-year increase of 5.7% from 5.0% and well above forecasts of 5.2% which reinforced expectations of upward pressure on wages. Federal Reserve officials will be watching wage developments closely in assessing the potential scope for interest-rate hikes with renewed market speculation of a 50 basis-point increase in March.

After being closed throughout last week for the new-year holidays, Chinse markets re-opened on Monday. Chinese data was weak with the Caixin services-sector index dipping to a 5-month low amid weak export orders, but equity markets posted gains and overall risk appetite held steady.

The Canadian capital of Ottawa has declared a state of emergency due to on-going protests against vaccine mandates in Canada. Canadian labour-market data was also weaker than expected with a reported employment decline of 200,000 for January as Omicron undermined activity while the unemployment rate increased to 6.5% from 5.9% with both figures weaker than expected. The Canadian dollar, however, posted a limited net advance on Monday with support from high energy prices as oil benchmarks traded close to 7-year highs.

Economic Calendar

Expected Previous
06:45 CHF Unemployment Rate n.s.a.(JAN) 2.60%
06:45 CHF Unemployment Rate s.a.(JAN) 2.50% 2.40%
07:00 GBP Halifax HPI (M/M)(JAN) 1.10%
07:00 German Industrial Production (M/M)(DEC, 2021) -0.20%
09:30 Euro-Zone Sentix Investor Confidence(FEB) 12 14.9
20:00 USD Consumer Credit(DEC, 2021) 19.50B 39.99B

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.