The US dollar ran into some selling pressure late after a surprise increase in the US unemployment rate suggested the Federal Reserve will continue to pump fresh money into the US economy for months to come.However, the US currency’s dip from multi-week highs against its main rivals could prove temporary as investors turn their attention to central bank meetings in the UK and eurozone. Pressure on the Bank of England ahead of its monetary policy announcement increased, after data showed Britain’s key services sector shrank for the first time in two years. The news may force sterling to sit uncomfortably although the BoE is not expected to deliver any new stimulus measures. The European Central Bank will announce its latest decision after the BoE and President Mario Draghi will also discuss the Central Bank’s decision shortly after. The euro could continue its stuttering start to 2013 should Draghi reiterate the region’s poor economic outlook, and hint that new simulative policy measures are in the pipeline.
Sterling
Sterling may struggle to lift itself from near one-month lows against the US dollar following figures published which showed Britain’s key services sector contracted in December for the first time in two years. The data underlines fears the UK economy may shrink again in the fourth quarter, which could then force the Bank of England to ramp up efforts to stimulate business activity in order to avoid a potential triple-dip recession. The services data comes in front of the central bank’s first policy decision of 2013. Although no change in interest rates or asset purchases is expected, sterling could slip if investors suspect policymakers will discuss plans to bolster money-printing strategies in response to some indifferent economic numbers
US dollar
A surprise increase in US unemployment dented the US dollar’s post-Federal-Reserve-minutes rally, forcing the currency to surrender multi-week highs against the euro and British pound. Despite US non-farm payrolls increasing in December by more than expected, the country’s overall jobless was revised higher from 7.7 per cent to 7.8 per cent in November, and reportedly stayed at that rate in December.
Euro
Focus on eurozone economic fundamentals is likely to intensify with the 17-nation area preparing to release its latest unemployment and consumer spending figures before the European Central Bank announces its monetary policy decision. The euro fell to a three-week low against the US dollar and may continue to face pressure with Europe’s jobless rate expected to remain close to record highs.