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Currency Market Analysis

Jul 10, 2020 | Currency Market Analysis

Global Themes

Growth worries stalked markets, buoying safe bets like the greenback, yen and gold. The search for shelter pulled the U.S. dollar off multiweek lows against the euro, sterling and Canadian dollar. The rally in risk assets hit an air pocket this week amid worsening news on the pandemic. Rising cases led Australia to reimpose lockdowns on one of its biggest cities. And while U.S. data has shown signs of improvement, the pace has started to tail off. The four-week average of U.S. weekly jobless claims has seen a moderating rate of recovery, which has poured cold water over hopes of a V-shaped bounce back.


The euro slipped off four-week peaks as a cautious market backdrop boosted safer rivals like the dollar and yen. Risk assets have pared recent gains amid a worrisome rise in coronavirus cases around the globe. The euro also appeared ripe for profit-taking ahead of next week when the ECB issues a policy decision on July 16.


Record hiring helped the loonie steady after an overnight slide to 10-day lows. Canada added a record 953,000 jobs in June which pushed unemployment down to a still-high 12.3% from historic peaks of 13.7% in May. While spectacular, Canada remains in a pandemic-induced hiring hole after it shed more than 3 million jobs in March and April. The data cemented expectations for the Bank of Canada to hold its interest rate steady at 0.25% when it meets on July 15.


Sterling weakened from three-week highs but was still on pace for a weekly win against the greenback. Still cautious sentiment leaves the pound prone to profit-taking when it rises toward the top of the range. Britain has a daunting data lineup next week, numbers that could potentially strengthen the argument for the Bank of England to push interest rates below zero. Data on growth, inflation and unemployment are due on Tuesday, Wednesday and Thursday, respectively.

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