Currency Market Analysis

Nov 10, 2015 | Currency Market Analysis

Global Themes

Due to the Canadian Remembrance Day holiday tomorrow, we will not be publishing the Currency Market Analysis on Wednesday, November 11th, 2015.  Publication will resume on Thursday, November 12th, 2015.

The U.S. dollar was steady to firmer in pre-holiday trade, finding solid underpinning from a late year rally that has it within reach of dozen year peaks touched in March. The dollar has been on a remarkable tear since the latter part of October as signs of a rebounding U.S. economy bolster chances for the Federal Reserve to close out the year with its first interest rate hike in nearly a decade. Meanwhile, policymakers in the euro zone could be weeks away from damaging the euro’s allure with more interest rate lowering stimulus to help keep flat lining inflation from unraveling the bloc’s anemic recovery. Sterling held a modest gain on the week but remained near the most affordable levels in six months for pound buyers. Data on U.S. import prices are due today. Canadian markets will be on holiday Wednesday, along with U.S. banks and bond markets. Wall Street will be open for the Veterans Day holiday Wednesday.


Big savings are on the table for euro buyers with the single currency slumping to fresh six-month lows. Falling interest rates in Europe and rising ones in the U.S. have contributed to the euro’s nearly 8-cent plunge since mid-October. The dramatic move has shaved the cost of buying €250,000 by nearly $20,000. Lock in some profit today and hedge in a way that allows for participation should the favorable trend persist. Please reach out to your account manager who can tailor a risk management program according to your unique needs.


Sterling steadied after a big rout last week knocked it to six-month lows against its U.S. counterpart. Meaningful savings remain on the table, with sterling in a 3-cent hole on the month against the dollar. Boding bearishly for the pound, the euro resumed its descent against the dollar, suggesting the pound may not be far behind.


The Aussie dollar weakened toward one-month lows hit Friday. The Aussie found weights in news of slower inflation in China of 1.3 percent in October while business optimism Down Under receded to plus-2 in October from plus-5 in September. Next up to drive the Aussie will be Wednesday data from China on consumer spending and factory output, and Thursday when Australia’s monthly jobs report comes due.


The loonie was steady in pre-North American holiday trade, with Canada and some U.S. financial markets closed Wednesday. Firmer oil kept a floor under the loonie, albeit a shaky one. The loonie held within two cents of 11-year lows hit in late September.


The dollar rode a fresh tailwind to nearly seven-month highs against the euro and a currency basket. The dollar’s breather Monday gave way to fresh buying with the U.S. currency back to being the most bullish currency on the block. Positive sentiment helped the dollar shrug off another lackluster gauge of inflation with import prices down 0.5 percent in October after a 0.6 percent decline in September, weighed down by weak oil prices, the strong dollar and subdued global spending.

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