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Currency Market Analysis

Nov 21, 2019 | Currency Market Analysis

Global Themes

The U.S. dollar softened after mixed signals on the world’s biggest economy. The buck edged lower against the euro, yen and sterling but held near six-week peaks against the Canadian dollar. Trade deal uncertainty between the world’s two largest economies is keeping broader market sentiment decidedly cautious. Data today offered evidence of a cooling U.S. labor market as weekly jobless claims steadied at 227,000, the highest in five months. On bright side, however, a gauge of Mid-Atlantic factory growth rose more than expected. The data largely offset and kept a high bar in place for the Fed to cut interest rates further. 


The euro rose to two-week highs on expectations that European data Friday might show tentative signs of stabilization. Germany, which barely dodged recession last quarter, will publish influential data Friday on its wobbly factory sector. While the numbers may confirm continued contraction in manufacturing, forecasts call for a modest upgrade. 


Canada’s dollar stuck near six-week lows after cautious comments from a top central bank official gave traction to chances of a local interest rate cut at a coming meeting. Canadian central bankers remain on alert about global headwinds which haven’t abated since officials last met in late October. Domestic data this week confirmed inflation near but just below the Bank of Canada’s 2% goal. Forecasts show a modest decline for Canadian retail sales on Friday. Evidence of moderating consumer spending would bolster rate cut prospects and potentially catalyze another round of loonie weakness.

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