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Currency Market Analysis

Nov 11, 2019 | Currency Market Analysis

Global Themes

Sterling was the star performer of otherwise holiday-thinned markets Monday. The greenback slipped against top peers from Europe and Japan but was mostly steady versus the loonie, Aussie dollar and emerging markets. The U.K. pound found twin tailwinds in news that Britain’s economy ducked recession and political developments that seemingly paved the way for Conservatives to gain a parliamentary majority in elections next month. The pound soared some 1% against the dollar and clocked six-month peaks versus the euro. The record run on Wall Street cooled to the benefit of safer bets like the yen as players seek concrete signs of trade progress between the U.S. and China. A busy week of economic events kicked off in holiday mode with some markets closed in Canada and the U.S. Wall Street is open for Veterans Day but the bond market gets the holiday off.

EUR

The euro rebounded from three-week lows thanks mostly to greenback sluggishness at the start of a holiday-shortened week. U.S. bond markets are off Monday to observe Veterans Day. Lots of event risks this week will drive sentiment toward the single currency. Germany issues numbers on investor confidence and third quarter growth on Tuesday and Thursday, respectively. The euro zone publishes third quarter growth and inflation figures on Thursday and Friday.  

CAD

Canada’s dollar steadied near three-week lows against the greenback in holiday-thinned trade for Remembrance Day to the north and Veterans Day to the south. Weaker oil markets kept a jobs-inspired headwind on the loonie. Oil shed more than 1% which knocked crude prices back below $57. The loonie tumbled to mid-October lows Friday after disappointing hiring data validated the Bank of Canada’s cracked door to a rate cut.

GBP

A runaway U.K. pound soared some 1% against the greenback and climbed to its highest in six months against the euro. Britain’s economy got the pound rolling with growth of 0.3% in the third quarter which allowed it to stave off recession. Britain’s economy was at risk of falling in to a technical recession after second quarter growth contracted by 0.2%. On the political front, developments seemed to increase prospects of the Conservatives gaining a coveted majority in Parliament. Nigel Farage’s Brexit Party indicated it wouldn’t challenge some of the Tory seats in the House of Commons.


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