Currency Market Analysis

Nov 26, 2021 | Currency Market Analysis

Global Themes

Global market turmoil returned with a vengeance on Black Friday, knocking the U.S. dollar from 16-month peaks. Worries about a new coronavirus variant ignited a wave of buying of recently oversold, low-yielding currencies like the euro, yen and Swiss franc. The yen led the charge higher against the greenback as it soared more than 1% and rebounded from nearly five-year lows. The euro notched one-week highs while the swissie stormed back from nearly eight-month lows. Wall Street stock futures were flashing red with the Dow industrials down more than 2%. Oil tumbled around 6%, pressuring the Canadian dollar which fell to eight-week lows. The World Health Organization will convene a meeting today to discuss the new Covid-19 variant that potentially could be resistant to the latest vaccines.

CAD

Sterling fell to 11-month lows Friday before stabilizing as the U.S. dollar lost general ground. Upside for the pound was limited as the new wave of the coronavirus added another layer of uncertainty about the interest rate outlook for Britain. Risk-off trading conditions with global equities sharply lower often bode negatively for Britain’s risk-sensitive currency.

EUR

The euro’s rout to 16-month lows hit the pause button as risk-averse investors unwound some of their bets on oversold, low-yielding currencies. The scramble to unwind anti-euro bets, coupled with thin holiday trade, exacerbated the euro’s bounce, lifting it nearly 1% to one-week highs.

GBP

Sterling fell to 11-month lows Friday before stabilizing as the U.S. dollar lost general ground. Upside for the pound was limited as the new wave of the coronavirus added another layer of uncertainty about the interest rate outlook for Britain. Risk-off trading conditions with global equities sharply lower often bode negatively for Britain’s risk-sensitive currency.


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