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Currency Market Analysis

Apr 06, 2020 | Currency Market Analysis

Global Themes

The U.S. dollar steadied around one-week highs while broader markets took a tentative turn for the better. The greenback firmed against the euro and yen but lost ground against sterling, Canada and the Aussie and kiwi dollars. Emerging markets from Mexico and South Africa descended to new record lows. The holiday-shortened week started with a risk-on tone on reports of progress on the coronavirus front in Europe. Italy reported a decelerating death rate, welcome news that many took as an excuse to wade into riskier waters. Oil prices moderated, though the Dow was poised for gains. Coronavirus developments and America’s job market will remain in the limelight. Many global markets will be closed for Good Friday.


Sterling bounced above one-week lows on hopes that Britain’s hospitalized prime minister would return to work relatively soon. Sterling depreciated by two cents against the greenback last week in a scramble for safety on signs of the coronavirus damaging the world economy. Numbers last week showed record weakness for European PMIs and a sudden spike in U.S. unemployment. 


Canada’s dollar rose Monday, boosted by improved risk sentiment and oil holding well above 18-year lows. A late week rally pulled oil prices toward $30 from 2002 lows below $20. While stronger, oil markets don’t appear to be out of the woods would sentiment hinging on expected talks later this week between Saudi Arabia and Russia. Also of critical importance for the loonie will be Canada’s jobs report Thursday, a day before the Good Friday holiday, which is forecast to show the economy hemorrhaged 350,000 jobs in March, sending unemployment to 7.2% from 5.6%.


The yen fell to one-week lows as progress on the coronavirus in Europe helped to whet appetite for riskier assets. The yen was also pressured by expectations that Japan as soon as this week may declare a state of emergency amid rising death rates from the coronavirus. Still, downside for the yen and other safer bets has been limited with USDJPY mostly flat since the beginning of the year.


The euro hovered around one-week lows despite signs of progress in Europe on containing the coronavirus. The death toll from the virus moderated in Italy, the euro zone’s No. 3 economy. Euro zone finance ministers are due to meet Tuesday to mull steps to safeguard growth from the virus. Also in focus this week are indicators on the health of Germany’s influential factory sector.

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