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Currency Market Analysis

Apr 05, 2021 | Currency Market Analysis

Global Themes

Lighter holiday trade kept the greenback and its major peers confined to narrow ranges. The euro was little changed while rivals from Japan, Britain and Canada edged up. Market participation remained lackluster with Europe enjoying an extended holiday break. Dollar bulls maintain the upper hand after U.S. job growth last month blew past expectations with a gain of more than 900,000 in March. An economic boom appears underway after the world’s biggest economy averaged monthly job growth of more than 500,000 over the first three months of the year. Still, the dollar hasn’t yet received a significant boost in the wake of Friday’s jobs report as it wasn’t considered a game changer for the Fed which has signaled it remains on a long road to policy normalization. Market focus today is on U.S. services growth at 10 a.m. ET that’s forecast to accelerate at the fastest pace in two years. 


The loonie started the week with a gain that helped it weather weaker oil which slipped below $60. Supporting the loonie are expectations for constructive domestic data this week as Canada on Wednesday is forecast to log a second straight monthly trade surplus, while the country’s jobs report Friday is likely to show unemployment ticked down to 8% from 8.2% in February, which was the lowest reading in 11 months. 


The U.K. pound ticked higher against both the dollar and euro, as it received a boost from improved risk sentiment with Wall Street futures in positive territory ahead of the start of Monday trading. Pound bulls also looked ahead to Wednesday when data is forecast to confirm that Britain’s leading services industry grew in March, which, if realized, would offer signs of economic green shoots sprouting, and bolster optimism in a sustained recovery.


The euro was little changed in holiday-subdued trade with Europe off for Easter Monday. Downbeat sentiment leaves the euro at risk of building on its three-week losing streak against the dollar. While down, the euro has so far managed to hold above key support against the dollar, a trend that, if continued, could help it form a tentative bottom. 

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