<p>Headlines:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/dollar-steadies-as-risk-optimism-fades-20230124/“>Dollar steadies as risk optimism fades</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/uk-january-flash-services-pmi-480-vs-497-expected-20230124/“>UK January flash services PMI 48.0 vs 49.7 expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/eurozone-january-flash-services-pmi-507-vs-502-expected-20230124/“>Eurozone January flash services PMI 50.7 vs 50.2 expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/germany-january-flash-manufacturing-pmi-470-vs-479-expected-20230124/“>Germany January flash manufacturing PMI 47.0 vs 47.9 expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/france-january-flash-services-pmi-492-vs-498-expected-20230124/“>France January flash services PMI 49.2 vs 49.8 expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-nagel-we-need-to-keep-tightening-to-dampen-price-pressures-20230124/“>ECB’s Nagel: We need to keep tightening to dampen price pressures</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/germany-february-gfk-consumer-sentiment-339-vs-330-expected-20230124/“>Germany February GfK consumer sentiment -33.9 vs -33.0 expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/france-january-business-confidence-102-vs-102-prior-20230124/“>France January business confidence 102 vs 102 prior</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/uk-january-cbi-trends-total-orders-17-vs-8-expected-20230124/“>UK January CBI trends total orders -17 vs -8 expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/switzerland-december-trade-balance-chf-283-billion-vs-chf-231-billion-prior-20230124/“>Switzerland December trade balance CHF 2.83 billion vs CHF 2.31 billion prior</a></li></ul><p>Markets:</p><ul><li>JPY leads, GBP lags on the day</li><li>European equities lower; S&P 500 futures down 0.3%</li><li>US 10-year yields down 2.1 bps to 3.502%</li><li>Gold up 0.3% to $1,936.73</li><li>WTI crude flat at $81.96</li><li>Bitcoin down 0.3% to $22,933</li></ul><p style=““ class=“text-align-justify“>The European morning session featured quite a number of data releases and it was PMI readings that helped to move the needle in markets today. The euro area figures were not too bad but not too good either, but at least pointing to a less bleak start to the new year as economic activity stagnated.</p><p style=““ class=“text-align-justify“>Instead, it was the UK figures that instigated some moves with the pound notably sliding on the back of rising recession fears. The report showed that the UK services sector slumped to its weakest in two years and that was enough to see GBP/USD fall from 1.2380 to 1.2303 and holding near the lows now.</p><p style=““ class=“text-align-justify“>Equities were steadier early on but the slight optimism faded and now the dollar also picked itself up from the lows to keep little changed for the most part – in particular against the aussie and kiwi.</p><p style=““ class=“text-align-justify“>The antipodeans were targeting key upside breaks above 0.7000 and 0.6500 respectively before price is pulled back on the day now.</p><p style=““ class=“text-align-justify“>Meanwhile, the yen continues to do its thing as the volatility trip continues with USD/JPY down around 129.90 to 130.20 levels throughout the session.</p><p style=““ class=“text-align-justify“>We’ll have US PMI data coming up later in the day and that will likely play into the underlying risk sentiment once Wall Street steps into the fray later today.</p>

This article was written by Justin Low at www.forexlive.com.

<ul><li>Prior -6</li></ul><p style=““ class=“text-align-justify“>The good news is that cost pressures are growing at the slowest in nearly two years for UK factories, but order books continue to be weak. The quarterly business optimism reading also improved to -5 from -48 previously, so that’s a positive but output volumes and new orders remain subdued.</p>

This article was written by Justin Low at www.forexlive.com.

<p style=““ class=“text-align-justify“>The interview is alongside his colleague Villeroy, who says that the ECB will probably reach peak rates by the summer. You can check out the full interview <a target=“_blank“ href=“https://www.lexpress.fr/economie/la-derive-de-la-dette-publique-en-france-est-preoccupante-villeroy-de-galhau-nagel-le-debat-WW4MMMETSJDXLEMTBHJCGEUPFA/“ target=“_blank“ rel=“nofollow“>here</a> but for the most part, these are remarks that have already been echoed for quite a while now by ECB policymakers.</p>

This article was written by Justin Low at www.forexlive.com.

<p style=““ class=“text-align-justify“>European indices opened with slight gains but have given that all back now as the early optimism fades. US futures have also moved lower and while I want to say that the PMI data today had a helping hand in that, I can only argue that the UK report was poorer than expected. The French and German readings were a mixed bag as noted <a target=“_blank“ href=“https://www.forexlive.com/news/not-worse-but-not-better-either-for-europe-to-start-the-new-year-20230124/“ target=“_blank“ rel=“follow“>here</a>.</p><p style=““ class=“text-align-justify“>In any case, stocks in Europe have nudged lower with the DAX down by 0.1% and UK FTSE down by 0.4% currently. Meanwhile, the dollar has steadied itself and is trading little changed against the euro, franc, loonie, aussie and kiwi after slight losses earlier. Of note, the aussie and kiwi have also seen their <a target=“_blank“ href=“https://www.forexlive.com/news/aussie-and-kiwi-both-target-an-upside-break-against-the-dollar-20230124/“ target=“_blank“ rel=“follow“>stronger gains from earlier</a> fade.</p><p style=““ class=“text-align-justify“>AUD/USD is now down 0.1% to 0.7018 while NZD/USD is flat at 0.6483 at the moment.</p><p style=““ class=“text-align-justify“>The pound is the notable laggard on the session with GBP/USD now down 0.4% to 1.2320 with the low touching 1.2310 moments ago. That’s a steep drop from around 1.2380 from before the PMI data earlier. The near-term bias has also turned more neutral now on a drop below the 100-hour moving average (red line) as this keeps with the rejection from the December highs of 1.2443-46:</p>

This article was written by Justin Low at www.forexlive.com.

<p style=““ class=“text-align-justify“><a target=“_blank“ href=“https://www.forexlive.com/terms/e/eur-gbp/“ class=“terms__main-term“ id=“e5b85617-1e4e-420a-84bf-96f67c9b9100″ target=“_blank“>EUR/GBP</a> saw a spike up from 0.8780 to 0.8800 as buyers stay in the hunt of a fourth straight day of gains, since bouncing off its 100-day moving average at around 0.8720 last week. The pound is falling after the poor UK PMI data, which showed that services sector activity slumped to a two-year low in January.</p><p style=““ class=“text-align-justify“>After the collapse in retail sales, this further highlights that the cost-of-living crisis is worsening in the UK and we are starting to see signs of it hitting the labour market as well. That might point towards a more painful downturn if the conditions keep up in the months ahead.</p><p style=““ class=“text-align-justify“>As for the pound, it’s hard to be optimistic. Even against the dollar, it looks like cable has failed to contest a break above its December highs of 1.2443-46 for now:</p>

This article was written by Justin Low at www.forexlive.com.