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Currency Market Analysis

Dec 20, 2019 | Currency Market Analysis

Global Themes

Greenback weaker as “Santa Claus rally” boosts shares

Please note: This is our final report for the year. The Daily Market Update will take a break over the Christmas-New Year period. We’ll be back on 6 January. Our offices will be open as usual. Merry Christmas!

The USD was weaker overnight as global equity markets continued to climb higher.

A combination of relief thanks to the US-China trade agreement, a potential resolution to Brexit, and seasonal influences that can boost markets during around the Christmas period, has seen risk-sensitive markets broadly higher this week.

The USDJPY fell 0.2% as it dropped from six-month highs.

The EURUSD climbed from one-week lows.

AUD higher

The AUDUSD gained 0.5% as it returned to levels near five-month highs.

The AUD was also supported after a strong Australian jobs report. The November report found 39k new jobs were created with the unemployment rate falling to 5.2%.

The NZD fell after a mixed September-quarter GDP report, which signalled an improvement in the recent pace of growth while the June-quarter number was downgraded.

The NZ quarterly growth rate jumped to 0.7% while the annual rate just missed expectations at 2.3%

US GDP

Today’s focus is on September-quarter US GDP, due at 9.30pm.

Also, the US Federal Reserve’s favoured inflation reading, the personal consumption and expenditure index, is due, along with consumer confidence numbers.

More broadly, after a strong rally in equity markets this quarter – the US Dow Jones index is up 10.2% from its October low – the USD might remain pressured in the near term.

An extension of the so-called “Santa Claus rally” could see further gains in global sharemarkets.

However, the risk remains that any shift into profit-taking in global equity markets could pressure FX markets as we head into 2020.


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