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Currency Market Analysis

Apr 03, 2020 | Currency Market Analysis

Global Themes

The U.S. dollar was flying high in pre-payrolls trade. The greenback strengthened across the board as many played it safe ahead of today’s U.S. employment report. Commodity currencies, like the Canadian dollar and Norwegian krone, slipped anew after an oil-inspired rally the day before when the price of crude logged a record one-day surge of 25%. America’s job market, the human and economic epicenter of the coronavirus pandemic, is in the limelight with the government’s March employment report. The data is expected to show the first loss of jobs in nearly a decade as companies closed their doors and some laid off works in a bid to try to slow the spread of the virus. Forecasts call for a loss of 100,000 jobs in March which is seen pushing up unemployment toward 4% from 50-year lows of 3.5%. Regardless of today’s print, unemployment is perceived on a fast track higher, potentially putting in play record joblessness above 10% in the weeks ahead.


The euro took another leg lower against the greenback as many preferred higher ground. European policymakers struggling to come up with a fiscal package to address the economic fallout from the coronavirus compounded the euro’s descent. The euro’s decline moved it less than two cents from recent three-year lows. The euro has shed 2% so far in early April and is down nearly 4% this year.


The loonie was mostly flat against its U.S. rival, boosted by oil building on its record spike the day before. The 25% surge in oil Thursday gathered pace with prices up more than 10% to $28. Hopes for price-supportive measures such a oil production cuts have seemingly put a floor under the wobbly market. Broader market sentiment remains fragile at best which bodes better for haven currencies like the greenback.


The dollar maintained gains despite horrific news on America’s job market. The U.S. shed 701,000 jobs in March which sent unemployment skyrocketing to 4.4% from half-century lows of 3.5%. The data far exceeded forecasts of a loss of around 100,000. The data painted a far worse picture of the state of the job market which is expected to worsen in the months ahead. The data underscored the tough task of trying to forecast the economic damage from the coronavirus and was consistent with unemployment topping 10% in the near future.


Sterling staged a late week slide of more than 1% following shockingly weak data from both sides of the Atlantic. A hybrid survey of U.K. factory and services growth tumbled in record fashion, pressuring the pound. Sterling also lost ground after far weaker than expected U.S. jobs data for March cast a darker shadow over the world economy.

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