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Currency Market Analysis

Nov 19, 2019 | Currency Market Analysis

Global Themes

America’s dollar drifted within tight ranges, awaiting a fresh catalyst for direction. The greenback was little changed against the euro, yen and sterling. Commodity currencies, including the Canadian dollar, and emerging markets tracked risk appetite and U.S. stock futures higher. The dollar has sputtered over the last several sessions on tentative signs of stabilization in Europe. Europe’s single currency has rallied in relief after data last week showed that Germany had unexpectedly avoided recession. Whether or not a true or false dawn is set for Europe could partly hinge in local data Friday. Ahead of Europe’s key data, the dollar kept to confined ranges. The Fed tomorrow releases the minutes of its late October meeting when it cut lending rates for the third time this year. Less dovish minutes that suggest the Fed is all but done with its mini easing cycle could give the dollar a lift.


The euro steadied around the top of its range, its highest level in more than a week against the greenback. Euro sentiment received a shot in the arm ever since data last week showed that Germany, the bloc’s largest economy, dodged recession in the third quarter. The euro stands to gain from any evidence of recovery taking hold which would temper expectations of bolder stimulus measures from the Christine Lagarde-led ECB. Europe publishes key data Friday on factory growth that could be a critical tone setter for the single currency. 


Canada’s dollar was broadly steady and comfortably above one-month lows plumbed last week. Canada’s dollar has found support from the notion that this week’s local data might stop short of strengthening the case for the country’s central bank to ease monetary policy. Inflation Wednesday is forecast to hold just below 2%, while retail sales Friday are expected to increase for the second time in three months. Weaker oil, with crude down more than 1% to $56, caused the loonie’s overnight bounce to lose some steam.


Sterling pared gains ahead of the first debate tonight in the U.K. between Boris Johnson of the Conservative Party and his main challenger Jeremy Corbyn of Labour. The debate is set to air around 3 p.m. ET. Polls suggest that Mr. Johnson carries a solid, double-digit lead into tonight’s debate which comes ahead of the general election on Dec. 12. A strong showing by Mr. Johnson would help to both solidify his lead and underpin the pound. A majority win for Mr. Johnson could pave the way to a pound-positive orderly Brexit by late January. 

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