Currency Market Analysis

Apr 13, 2020 | Currency Market Analysis

Global Themes

The U.S. dollar ticked higher in the holiday-light trade. Gains against the euro and commodity currencies provided a general boost to the greenback which was otherwise weaker against the yen and sterling. Many regions are still closed for the holiday weekend. Oil-exposed currencies were subdued despite OPEC’s record production cuts of nearly 10 million barrels a day. The cartel hopes that the record agreement will help put a floor under oil prices. Still, the outlook remains troubled for oil markets given that the coronavirus has significantly damaged demand. Currencies today could meandering within their ranges before market participation picks up from Tuesday. Key market events this week include U.S. retail sales and a Bank of Canada policy decision on Wednesday, and Thursday when the U.S. releases the new weekly jobless claims whose record weakness has been consistent with unemployment soaring towards double digits.

GBP

Sterling rose to one-month highs in light holiday trade. Underlying sentiment toward the pound brightened on news that U.K. Prime Minister Boris Johnson was well enough to leave the hospital over the weekend. While Mr. Johnson recovers from the coronavirus, attention for sterling shifts back to global risk sentiment and domestic data which is sparse this week.

EUR

The euro drifted south in holiday-subdued trade. Most of Europe remained closed for the long holiday weekend. The euro strengthened more than a cent against the U.S. dollar last week following the Fed’s latest efforts to ease the economic hit from the coronavirus. The Fed offering up to trillions in loans to households, businesses and local governments sparked a Wall Street rally that satiated appetite for the safe greenback.

CAD

Canada’s dollar was subdued in holiday quiet trading. The loonie had strengthened to more than two-week peaks after oil producers were headed for a record deal to cut output by nearly 10 million barrels a day. Still, oil markets remain on volatile ground given the significant reduction in demand. Canada’s main event risk arrives with a Bank of Canada decision Wednesday. Central bankers’ assessment of the economy and their willingness to do more to support growth will be of critical importance in shaping loonie sentiment.


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