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Currency Market Analysis

Dec 06, 2018 | Currency Market Analysis

Global Themes

The U.S. dollar was mixed but generally subdued after data showed below forecast American job growth last month. Global markets were in a classic risk-off mood, buoying safer bets like the yen which hovered near two-week peaks. U.S.-China trade worries are flaring anew, sending stocks lower and investors in search of higher ground. The euro and sterling firmed while Canada’s dollar crashed to 1 ½ year lows amid a double whammy of lower oil markets and dampened expectations of a local rate hike anytime soon. A slew of U.S. data today got off to a weaker than expected start after payrolls company ADP reported the slowest job growth in months. Higher-yielding emerging markets bore the brunt of renewed trade concerns after a top official at a Chinese tech firm got arrested. More data loom today though the report everyone wants to see comes Friday in America’s monthly jobs report.


The euro was pinned in a tight range with upside checked by European growth worries. The euro firmed as the greenback surrendered ground in the wake of tepid jobs data that did little to defuse concerns about a decelerating U.S. economy. The single currency also received a boost from news of surprise growth in German industrial orders in October.


Sterling kept within a penny of 17-month lows against the greenback. Scope for sterling strength was considered limited ahead of next week’s crucial vote on the prime minister’s Brexit deal with the EU. Britain’s parliament is set to vote on the plan on Dec. 11. Failure to secure parliamentary approval of the deal could open a very messy can of worms for sterling.


Canada’s dollar sank to 1 ½ year lows for a second straight day, amid a double whammy of negatives from cautious rate guidance from the Bank of Canada and a renewed slide in oil of nearly 3% to $51. As expected, the BOC left its main rate unchanged at 1.75%, after Canada’s economy slowed last quarter and oil, a key export, lost about a third of its value. The bank signaled greater concern over trade, a dovish view that weakened the case for a rate hike in early 2019. Underscoring trade concerns, Canada today reported a bigger than expected trade deficit of C$1.2 billion in October, a worrisome sign for fourth quarter growth.

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