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Currency Market Analysis

Apr 24, 2020 | Currency Market Analysis

Global Themes

America’s dollar steadied after an overnight romp to multi-week highs. The greenback was little changed against rivals from Europe, Japan and Canada. Historic plunges this week for oil and global data had the haven U.S. currency on track for one of its best weeks of April. The euro cut losses after an earlier dive to one-month lows. The EU agreed on more aid to help the bloc endure the coronavirus. But Europe’s latest efforts failed to inspire confidence or improve still lackluster sentiment toward the single currency. Sterling was subdued after data showed a record drop in U.K. consumer spending. Global market sentiment remains fragile at best, particularly ahead of next week which is loaded with influential risk events. The Fed and ECB hold policy meetings on Wednesday and Thursday respectively. Bad news and negative numbers are expected for first quarter growth from the U.S. and Europe.

GBP

Sterling trailed the dollar for the week, hurt by mounting evidence of the U.K. economy descending into an unprecedented downturn. British retail sales today posted a record plunge of more than 5% in March. The data followed reports this week showing rising unemployment and falling inflation. Numbers next week are forecast to highlight the anemic shape of the U.K. economy with measures of retail spending and manufacturing expected to confirm a deep contraction.

CAD

A somewhat resilient Canadian currency kept to the range despite oil’s historic weakness. USDCAD traveled less than three cents this week despite oil’s historic collapse below zero. Oil’s recovery over the course of the week buoyed commodity currencies with prices not far from $20. Energy-market developments and data Tuesday on Canadian growth for February will help guide the loonie’s coming week.

EUR

The euro wavered in choppy trade after sinking to one-month lows. EU leaders endorsed more aid to help stem the economic damage from the coronavirus. But divisions and doubts remain over the efficacy of the measures which is keeping upside for the single currency on a leash. Meanwhile, Europe’s biggest economy appears to be going backwards at a faster pace. Germany’ Ifo survey of business confidence posted a record drop in April.


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