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Currency Market Analysis

May 10, 2021 | Currency Market Analysis

Global Themes

The U.S. dollar fell to fresh lows Monday, still reeling from the previous week’s lackluster jobs report. Broad declines knocked the greenback to new multimonth lows against the euro and sterling, and to multiyear lows versus the Canadian dollar. Elsewhere, the Aussie dollar neared highs for the year while emerging markets also strengthened with South Africa’s rand around January 2020 highs. The dollar suffered the latest in a string of second quarter setbacks after April’s jobs report Friday showed a sharp slowdown in hiring and a surprise uptick in unemployment. The data supported the Fed’s low interest rate stance and bolstered conviction in the central bank tapering stimulus later rather than sooner. U.S. consumer inflation Wednesday and retail sales Friday will share the spotlight in the week ahead. 


The euro scored new highs against the jobs-weakened dollar, climbing to its highest since late February. The health of the German economy, Europe’s biggest, holds a key to the euro this week with a gauge of investor confidence forecast to rebound in May after declining in April, its first fall since late 2020. Germany issues its influential ZEW survey Tuesday.  


Sterling rode a politically-inspired rally to more than two-month peaks against the greenback. The pound surged more than 1% to late February highs as it appeared less likely that Scotland would hold an independence referendum anytime soon with the UK government mainly focused on nursing the economy back to health after being flattened by the pandemic. UK growth figures Wednesday loom large for sterling with preliminary Q1 numbers forecast to show the economy contracted 1.6% after it grew 1.3% during the final quarter of 2020.


New week, new September 2017 highs for the Canadian dollar versus its beleaguered U.S. rival. The loonie outperformed as a range of commodities, like oil, one of Canada’s top exports, strengthened while the U.S. currency nursed losses linked to last week’s disappointing jobs report that suggested the economy was in sync with the Fed’s low rate guidance for some time yet. 

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