January 2 2019

Jan. 2, 2019 (Western Union Business Solutions)  – The U.S. dollar fared mixed on the first trading day of 2019. The dollar rallied against its European counterparts, hit a seven-month low against the yen and was little changed against the Canadian dollar. It may be a new year but the same uncertainties continue to dog global markets. Disappointing data from China and Europe added to mounting signs of a moderating world economy, a risk-averse backdrop that supported safe bets like the U.S. and Japanese currencies. The broadly weighted U.S. Dollar Index appreciated 4% in 2018 which proved its strongest year in three. Yet the U.S. currency finished 2018 in second place as it took a back seat to the yen which thrived as a haven destination from global stock swings and moderating expectations for U.S. growth and higher interest rates this year. This week’s main event will be America’s jobs report on Friday that’s forecast to show faster hiring in December.

 

USD

 

The dollar caught a safe haven boost with global markets in the red in the wake of dismal data from China and Europe. The coming year could prove more challenging for the dollar should the U.S. economy slow and throw a wrench in Fed plans to continue to lift borrowing rates in 2019. America’s jobs report Friday will be important for the buck’s early 2019 prospects as labor market strength and the lowest unemployment in 49 years have the Fed penciling in higher interest rates this year.

 

JPY

 

The yen kept in pole position after gaining against the otherwise stronger greenback in 2018. A messy global backdrop of moderating growth and political uncertainty in Britain and beyond continues to stoke demand for safer plays like the yen which clocked a seven-month high on the first trading day of 2019. Until market risk factors subside, the path of least resistance appears higher for the yen.

 

EUR

 

The euro started the year with a plunge after disappointing factory data from the Top 4 euro zone economies weighed. The big blow came from manufacturing data from France and Italy that showed growth below the boom or bust level of 50. With factory growth in the red in the bloc’s Nos. 2 and 3 economies, it underscored the dovish outlook for ECB policy, a chief source of euro weakness.

 

CAD

 

Canada’s dollar steadied out of the 2019 gates but its outlook remained fraught with negativity with oil markets in the red. Sliding oil prices signal a weaker outlook for global growth, a scenario that suggests a closed door for the Bank of Canada to raise borrowing rates this month or any time soon. Canada on Friday will release the nation’s December jobs report that’s forecast to show a marked slowdown in hiring to around 5,500 jobs after a record gain of more than 90,000 in November.


USA