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Currency Market Analysis

Apr 10, 2020 | Currency Market Analysis

Global Themes

The U.S. dollar remained subdued in holiday-hushed trade with many regions closed for Good Friday. The dollar struck a defensive posture this week thanks to the Fed’s impressive fireworks display that helped to brighten the market’s mood. Consequently, Wall Street turned in its best week in decades, and the resulting improvement in risk appetite spurred an unwinding of the safety trade into the greenback. The Fed unleashed the monetary floodgates, offering up to $2.3 trillion in an array of loans to consumers, businesses and local governments. Wall Street is closed for Good Friday.

CAD

Canada’s loonie notched two-week highs as it sidestepped record weak jobs data. The Fed’s masterful job of keeping credit flowing was met with a raucous reception by markets with America’s S&P index logging its best week since 1974. The resulting improvement in risk appetite weighed on safe plays like the greenback. Next week will see the Bank of Canada in focus. With interest rates already near zero, attention will be on policymakers’ assessment of the economy and their willingness to do more to support growth.

EUR

The euro defeated the dollar this week and rose to one-week peaks. The euro caught a policymaker bounce following aggressive stimulus from the likes of the Fed and euro zone finance ministers. Just before the long holiday weekend, euro zone finance chiefs agreed on massive aid to the tune of around half a trillion euro to help the economy deal with the economic fallout from the coronavirus.

GBP

Sterling rose to four-week highs, boosted by dollar weakness and the improving health of Britain’s prime minister. Boris Johnson improved to the point that he was released from the ICU after a several night stint. Mr. Johnson reportedly remains in the hospital but his improved condition helped to peel away a layer of political uncertainty that had pressured the pound.


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