Currency Market Analysis
Dec 31, 2015 | Currency Market Analysis
The dollar was mixed to firmer on the last day of the year, up against the euro but down versus the safer yen in generally risk-averse trade. For the year, the dollar was set to cross the finish line first, though with a smaller margin of victory after seeing its gains wane over the final month of the year. Midnight ushers in a new year and a fresh start, but market risk factors over sluggish global growth and geopolitical uncertainty will linger, which could set currencies on an unpredictable path.
The euro was poised to end a down year on a down note. For the month though, the euro logged a winning December after the European Central Bank deployed fresh stimulus that stopped short of shocking and awing. 2015 got under way with the euro above $1.20. The degree to which monetary policies diverge between Europe and the U.S. will be a driving force for euro-dollar in 2016. Will 2016 saddle the euro with another multi-cent swoon?
The loonie steadied on New Year's Eve but remained on wobbly ground with oil keeping in the red, down nearly a percent to below $37. The loonie fell far and fast in 2015, having started the year below C$1.17. The loonie was throttled by plunging oil prices which lead to multiple rate cuts by the Bank of Canada, and a first half recession for the Canadian economy. Absent a turnaround in oil, the loonie is at risk of deepening its slide over coming months.
The dollar firmed on the final day of a strong year with markets looking ahead to 2016 when the Federal Reserve has penciled in a series of dollar-bolstering interest rate rises. The dollar was unfazed by data today that showed weekly jobless claims jumped 20,000 to 287,000 - keeping to a healthy range and near historic lows. 2016 looks bright for the buck but it will need the cooperation of a better economic backdrop at home and abroad for it to sustain its run.
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