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Currency Market Analysis

Mar 29, 2021 | Currency Market Analysis

Global Themes

A mostly stronger U.S. dollar hovered around multimonth highs ahead of late week jobs data that’s forecast to show faster hiring. The buck was steady to firmer versus the euro, yen and Canada, while sterling rebounded from seven-week lows. Wall Street was poised for a subdued start to the holiday-shortened week which translated into safe haven support for the dollar. The U.S. dollar index was on track for solid monthly and quarterly gains of around 2% and 3%, respectively, as the country’s robust vaccination drive has led to a material brightening in growth prospects. America’s job market is expected to build on last week’s progress when weekly jobless claims improved below 700,000, a pandemic low. Focus this week is on nonfarm payrolls for March which print on Good Friday when major markets will be on holiday. Hiring likely accelerated to around 630,000 jobs this month from February’s gain of 379,000.

CAD

Partially subdued global markets and a firmer greenback kept the loonie near two-week lows. Oil volatility subsided on constructive news about the massive ship stuck in the Suez Canal which has reportedly been ‘partially refloated.’ Key for the loonie this week is Canada’s January growth report Wednesday that’s forecast to show the economy accelerated at a 0.5% rate to begin the year, above its muted uptick of 0.1% in December. Stronger growth would bolster the case for the Bank of Canada to scale back its weekly bond buying stimulus as soon as its coming meeting on April 21.

EUR

The euro remained on its back foot and pinned near 4 ½ month lows against its U.S. counterpart. Down about 2.5% in March, EURUSD was on pace for its worst month since July 2019. The euro remains saddled by significant lockdown fatigue as measures to slow the virus have materially darkened the bloc’s near-term growth prospects. The big number from Europe this week is euro zone inflation for March on Wednesday that’s seen edging up to a still low 1.3% from below 1% in February.

GBP

Sterling rose against the otherwise firmer greenback, buoyed by reduced vaccine uncertainty, the key driver that had pushed it to seven-week lows last week. Recent pressure on the pound abated as the EU has seemingly shelved plans to ban vaccine supplies to the U.K. Britain this week issues revised fourth quarter growth on Wednesday that’s forecast to confirm the economy grew by 1%. Sterling’s recent retreat had GBPUSD on track for a March decline of roughly 0.6%, though the pair remained 1.2% higher for the year.


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