Currency Market Analysis

Nov 12, 2019 | Currency Market Analysis

Global Themes

Broad gains lifted the U.S. dollar nearly across the board. The buck was at or near one-month highs against the euro and Canadian dollar and climbed against the yen and sterling. Wall Street pointing to early session gains helped whet appetite for riskier emerging markets. Attention today will be on a noon ET speech by President Trump at the Economic Club of New York. Helping the dollar higher is the sense that the president might use the occasion to trumpet progress with respect to trade with China and Europe. In the case of the latter, Mr. Trump could delay a decision on whether to slap tariffs on European autos. Upbeat remarks that temper trade-related headwinds would stand to bolster the dollar by suggesting the Fed is done with preemptive rate cuts to help sustain America’s record 11 years and counting growth streak. 

GBP

Sterling edged lower after an explosive 1% rally the day before. The pound soared Monday after political developments suggested a greater likelihood of the Conservatives winning next month election and gaining a majority in Parliament, a situation that would improve its prospects of delivering Brexit by late January. Sterling lost ground against the dollar which firmed ahead of noon ET remarks by President Trump. Meanwhile, mixed U.K. data fit with the view of a weakening job market as unemployment declined but so did the pace of hiring and wage growth.

CAD

Canada’s dollar steadied after sinking overnight to one-month lows. The loonie, one of the year’s best performing major currencies, has been on the defensive over the past couple weeks after the Bank of Canada emphasized global uncertainty as a growing threat to growth. Coupled with a mixed jobs report last week, odds have risen for a loonie-negative interest rate cut by the BOC over the coming months.

EUR

The euro fell to four-week lows against the broadly firmer greenback. The buck was spotted an early session lead ahead of lunchtime remarks from President Trump. At the margin, the euro’s descent was slowed by better news on the wobbly German economy as a gauge of investor confidence improved more than expected to minus 2.1 for November compared to forecasts of minus 13. The euro’s main sights are on German third quarter growth Thursday. While contraction and recession are on the cards any surprise improvement would be euro positive.


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