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Currency Market Analysis

Jan 07, 2019 | Currency Market Analysis

Global Themes

USD tumbles to five-month lows on Fed hopes

The US dollar ended last week’s volatility-driven roller-coaster with a strong move lower after US jobs came in much stronger than expected while the US Federal Reserve struck a more cautious note.

On Thursday, FX markets stumbled after a warning from Apple sparked a worldwide selldown that saw the local currency briefly reach the lowest levels since March 2009.

The Apple warning came in a fragile environment that has seen the US’s Dow Jones down as much as 19.4% since October. te.

Getting better

The US Fed, which said it was listening to markets carefully and might suspend its recent series of rate hikes, also saw the USD weaken.

The Fed’s news overwhelmed to USD’s reaction to the strong US jobs report – with 312k new jobs created – boosting sentiment.

The USDSGD fell 0.3% to the lowest level since late July.

Risks remain

FX markets remain prone to shock.

In particular, any further slowdown in US or Chinese manufacturing could pressure FX markets.

Otherwise, this week’s focus will be on the US central bank with the Fed minutes due Thursday morning and the Fed chair Jerome Powell due to speak on Friday morning.

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