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Currency Market Analysis

Apr 02, 2020 | Currency Market Analysis

Global Themes

America’s dollar largely jogged in place ahead of today’s crucial look at the health of the nation’s job market. The dollar was mixed but broadly flat, posting gains against the euro and yen, and losses against sterling and Canada. Elsewhere, a 10% rally to $22 helped battered oil markets rebound from 18-year lows. Stocks were also pointed higher. The rebound in investor confidence looked tentative as many wrestle with the extent to which global growth has fallen over a coronavirus-induced cliff. Moreover, uncertainty remains high over when the recovery will arrive and how strong it might be. All eyes today are on America’s weekly snapshot of jobless claims. Another print of at least 3 million is expected following the previous report’s record spike to around 3.3 million. Whisper numbers suggest today’s print could easily top last week’s record. Last week’s report contributed to the dollar’s worst week in more than a decade.


The U.S. dollar caught a safe haven boost after the latest snapshot of weekly jobless claims soared to a new historic high of 6.6 million which poured cold water over hopes of a V-shaped recovery. The latest number was twice as big as last week’s record-breaking surge to 3.3 million, a trend that points to a swift surge in unemployment. Friday’s U.S. nonfarm payrolls and unemployment data could understate the weakness that’s engulfed the labor market. Forecasts call for a loss of 100,000 jobs in March which is expected to push unemployment to 3.8% from 3.5%, the lowest in 50 years. 


The euro fell to the floor of its range, stalked by rising growth fears across the continent. Germany’s economy minister today warned that Europe’s biggest economy was at risk of contracting at a faster pace than during the financial crisis, due to the coronavirus and how it’s hit the brakes on European and global growth. 


Sterling rode the coattails of higher stocks and oil markets which allowed the hard hit unit to hold above recent 35-year lows. Still, the legs under the pound appeared a bit wobbly, built largely on investor confidence which continues to waver with a downbeat bias. U.S. stocks are riding a two-day losing streak with today’s critical American jobless claims report likely to dictate today’s direction.


Canada’s dollar rebounded after its worst month in years, thanks to a 10% bounce in oil markets. Crude topped $22, a $2 jump on the day that lifted prices above recent 18-year lows below $20. March saw the loonie depreciated by about 5% against its U.S. counterpart, its worst performance in five years. The loonie reversed course after a record spike in a gauge of U.S. unemployment sent alarmed investors into the safety of the greenback, eclipsing news of a narrower Canadian trade gap of C$983 million in February.

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