Currency Market Analysis

Mar 26, 2021 | Currency Market Analysis

Global Themes

The greenback was perched near highs for the year ahead of key readings today on America’s growth engine. The euro wallowed near four-month lows while safer bets struggled with the Swiss franc and yen hitting fresh eight- and nine-month lows, respectively. Improved risk sentiment, with stock futures and oil up, buoyed the commodity trio from Canada, Australia and New Zealand. America’s buck was on pace for a second straight weekly rise as better news on the U.S. job market painted a picture of accelerating growth. Weekly jobless claims, while still three times higher than pre-pandemic levels around 225,000, finally cracked below 700,000 for the first time in a year. Focus today is squarely on the economy-driving consumer whose pace of spending likely cooled in February following a 2.4% spree in January which was the fastest in seven months.

CAD

The loonie rose above two-week lows but was still poised for a second consecutive weekly decline against its southern rival. Canada’s dollar was mostly held hostage to oil market gyrations in the absence of meaningful domestic data. While higher, oil remained below $60 after hitting six-week lows this week under $58. The slide in oil was partially arrested after a massive container ship ran aground in the Suez Canal, which clouded the near-term supply outlook for crude, buoying prices.  

GBP

The euro treaded water above four-month lows as it found support from encouraging news on the German economy. Germany’s Ifo index of business sentiment brightened more than expected to 96.6 in March, the highest in nearly 2 years, which compared to forecasts of 93 and the previous month’s 92.7. EUR/USD suffered a black eye this week when its descent to November lows pushed it below the critical 200-day moving average, a move that left the pair vulnerable to further falls over the near-term.

EUR

The euro treaded water above four-month lows as it found support from encouraging news on the German economy. Germany’s Ifo index of business sentiment brightened more than expected to 96.6 in March, the highest in nearly 2 years, which compared to forecasts of 93 and the previous month’s 92.7. EUR/USD suffered a black eye this week when its descent to November lows pushed it below the critical 200-day moving average, a move that left the pair vulnerable to further falls over the near-term.

USD

The dollar wavered from multimonth highs following soggy news on the consumer and after underlying inflation unexpectedly slowed. Consumer spending fell 1% last month as incomes contracted by 7.1%. Softer consumer data is likely to prove to be a blip in the wake of the government’s passing of the substantial $1.9 trillion American Reduce Plan that is sending $1,400 relief checks to many Americans. Bolstering the Fed’s low rate guidance, the central bank’s main measure of inflation, the core PCE index, unexpectedly slowed to 1.4% annual rate, compared to expectations to steady at 1.5%.


Get the daily currency market analysis in your Inbox

Published five days a week, this newsletter provides day-to-day trends and activities affecting the market in easy-to-understand snapshots.