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Currency Market Analysis

Apr 09, 2020 | Currency Market Analysis

Global Themes

America’s dollar steadied ahead of a barrage of event risks. The dollar was broadly flat against the euro and yen while it edged up against Canada and down versus Britain. Calmer currency waters could stir anew with a confluence of risk events, including today’s weekly jobless claims, an update on the economy by the head of the Fed, and monthly employment numbers from Canada. If that’s not enough, market eyes are also on pandemic developments, an OPEC meeting, and another attempt by European finance ministers to agree on emergency aid to battle the coronavirus crisis. In short, there is plenty to potentially jolt markets ahead of the long holiday weekend. The dollar has trended lower this week on signs of progress in slowing the spread of the virus. Today’s data should shed light on the extent to which the virus as weakened the world economy.


Sterling rose to one-week peaks as it benefited from the relative calm that’s washed over global markets this week. Domestic data painted a weakening picture of growth which unexpectedly contracted by 0.1% in February. Upward revisions to previous numbers helped to lessen the economic hit to the pound. The pound’s increase moved GBPUSD closer to a psychological ceiling it last touched in mid-March. 


The euro strengthened in choppy, events-driven trade. The euro’s uptick may hinge on the outcome of a meeting today of euro zone finance ministers who have struggled to agree on an emergency aid package to buoy the bloc from the substantial shocks from the coronavirus. Reports that some European nations like Austria and Denmark are contemplating exiting economic lockdowns also translated into support for the single currency. 


Canada’s dollar wavered after the nation posted a record loss of more than a million jobs in March. The record loss of jobs shoved unemployment up to 7.8% from 5.6% in February. Record weakness in Canada’s job market suggests the pandemic has dealt a bigger blow than expected to growth. The loonie for now is taking some comfort from higher oil prices on expectations that OPEC and Russia may agree to output cuts. Commodity currencies are also finding support from fresh stimulus from America’s central bank that’s added to the calm that’s washed over global markets this week.


The dollar fell after data showed a bigger than expected rise in weekly jobless claims, a decline that gained traction after the Fed delivered another strong dose on monetary stimulus to help steady America’s economy and global financial markets. The latest jobless claims topped 6.6 million which kept the overall level below but close to the previous week’s record of nearly 7 million. The Fed today unveiled a fresh loan program designed to pump $2.3 trillion into the U.S. economy to help spur lending and spending to spur a robust recovery once the virus runs its course.  

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