By George Pavel, General Manager at Capex.com Middle East.

he dollar lacked a clear direction today and recorded some volatility. Economic data released last week indicated a resilient labor market, as job creation in December was higher than anticipated, dampening expectations over interest rate cuts to a certain extent. Traders could monitor the release of inflation data later this week as they could further affect the anticipated interest rate path. As a result, the dollar could see limited changes in the meantime.

The euro’s performance remained limited as well, as traders reacted to the economic data from the region. In Germany, retail sales declined faster than expected while factory orders rose less than hoped, indicating further economic difficulties in Europe’s largest economy and adding to the pressure on the euro. Meanwhile, inflation levels in the EU have rebounded, as anticipated but at a slower pace. As a result, the euro could face pressures due to the economic outlook as well as to the expectations of early rate cuts which might help mitigate the impact of higher rates on the economy.

The pound’s movements today were similarly limited and directionless as other majors. Despite the GBP making some gains over the last three trading sessions, buoyed by some improvement in its PMI data and the Bank of England’s (BoE) ‘higher for longer’ interest rate stance, markets remain skeptical about the UK’s economic health, with concerns over shrinking economic growth and inflation levels.

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