Forex News

Dec. 6, 2019 (Allthingsforex.com) – A blockbuster U.S. Non-Farm Payrolls report gave a short-lived boost to the greenback, but most dollar bulls seem to be sitting on the sidelines in expectation of the upcoming FOMC meeting on Wed., Dec. 11.

The odds of another rate cut by the Fed next week have diminished as the U.S. economy added 266k jobs in November, higher that the forecast of 180k, and more than doubling the 128k gain in jobs for October. The unemployment rate also saw an improvement with a decline to 3.5% in November from 3.6% in the previous month.

At the moment, the market consensus is for the Fed to hold rates steady within the current 1.5% to 1.75% range at its December meeting. Such decision would move the Fed into more neutral mode following a sequence of three consecutive rate cuts announced at the Fed’s last three meetings.


USA 

Dec. 5, 2019 (Allthingsforex.com) – The EUR bulls have been in charge for the last few trading sessions, however, today’s disappointing retail sales data, combined with a weak GDP report from the Euro-area, did little to offer further impetus to the recent euro rally.

October was a very poor month for European retailers with sales falling by 0.6% month over month, while year over year increase came up to only 1.4%, compared with 2.7% y/y in the previous month. That’s almost 50% drop in the annual reading, but it would be interesting to see if shopping for the Holidays would provide a much-needed boost in December’s retails sales figures.

The final GDP reading for Q3 2019 did not impress, either. Economic growth in the Euro-zone was confirmed at 0.2% q/q and held steady at 1.2% y/y.

In the last couple of days, the EUR has been trying to break decisively above $1.11 and the single currency continues to linger around this level at the time of this publication.

It is now up to tomorrow’s U.S. Non-Farm Payrolls report to offer the catalyst for the next more significant move in the EUR/USD exchange rate.

Forecasts point to an upbeat employment data with the U.S. economy expected to add 180k new jobs in November from 128k in October, while the unemployment rate remains unchanged at 3.6%.

Sept. 18, 2019 (Western Union Business Solutions)  – The  U.S. dollar added to its modest gains after the Fed cut interest rates as expected and offered an overall sanguine assessment of the U.S. economy.

 

The Fed shaved another quarter percentage point off the fed funds rate which it lowered to a range of 1.75% to 2.00%. The 7-3 vote in favor of today’s action showed that two officials dissented, preferring to keep policy unchanged, while the other wanted a bolder 50 basis point cut.

 

The Fed is now forecasting slightly quicker growth of around 2.2% this year. The central bank expects unemployment to stick near 50-year lows below 4%, while inflation went unrevised just below the Fed’s 2% goal.

 

Next up: the chairman’s press conference at the bottom of the hour.

 

Barring a material deterioration in U.S. data, the dollar should benefit from the view that the Fed may have fired its last cut for a while, dampening elevated market expectations of action again before year-end.

 

There will be just two more Fed decisions this year, on Oct. 30 and Dec. 11.

 

EUR 1.1038

JPY 108.25

GBP 1.2472
CAD 1.32 94

Sept. 12, 2019 (Western Union Business Solutions)  – The euro dropped then quickly popped after the European Central Bank delivered a strong dose of stimulus to try to revive the bloc’s morbid economy. The euro’s loss was the greenback’s gain as it rose against a basket of rivals. The yen edged up from six-week lows as the ECB’s action pushed down Treasury yields. Sterling and the Canadian dollar were little changed. The ECB deployed a dovish arsenal of measures to revive growth and inflation as it cut a key interest rate to historic lows, restarted QE bond buying and vowed to keep policy at present or lower levels essentially until the cows come home. The ECB cut the deposit rate to fresh all-time lows of -0.5% from -0.4%, and vowed not to increase it until inflation, now at 1%, ‘robustly’ converges toward its near 2% goal. By beefing up policy with an open-ended commitment, the ECB excited euro bears who dumped the single currency.

ECB

The ECB cut a key rate further below zero, while it revived its QE bond buying program and reinforced its forward guidance to indicate that higher rates were off the table until stubbornly low inflation rises ‘robustly’ toward its goal of just below 2%. QE is set to resume at €20 billion a month starting in November and continue indefinitely. The open-ended nature of stimulus was read as decidedly dovish and negative for the euro.

JPY

The yen hit new six-week lows overnight only to stabilize after the ECB delivered a solid jolt of stimulus that put downward pressure on Treasury yields, a key driver of USDJPY. The yen has fallen out of favor amid de-escalating trade tensions between the U.S. and China.

GBP

Sterling kept to a range as the Brexit drama eased a bit with Parliament on a five-week break until mid-October. Nevertheless, the Brexit situation remains fluid after a court this week ruled that Prime Minister Boris Johnson’s decision to suspend Parliament was ‘unlawful.’ The legal battle over Brexit looks set to play out over the coming days and weeks. Sterling continues to hold above multiyear lows as the latest developments suggested a somewhat reduced risk of a disorderly Brexit next month.

AUD

A softening in the U.S.-China trade war allowed the Aussie dollar to climb to six-week peaks. The neighboring kiwi dollar neared a one-month high. In a gesture of goodwill, President Trump delayed by a couple weeks to mid-October the implementation of higher tariffs on China. Australia and New Zealand have a heightened sensitivity to all things China, the destination for a significant portion of their resource exports.

CAD

Canada’s dollar slumped to lows for the week, weighed down by weaker oil markets. The price of oil slipped below $55, the lowest in more than a week. Consequently, USDCAD recovered from six-week lows hit earlier this week. Broad based strength in the greenback has also left the Canadian currency a bit vulnerable. A dovish ECB policy decision today, coupled with signs of a resilient U.S. economy, buoyed the greenback.

 

 

July 31, 2019 (Western Union Business Solutions)  – If this week’s Fed meeting was a test of dollar strength, the U.S. unit passed with high marks. The dollar cruised to new highs after the Fed fired its first rate cut in a decade. The greenback clocked May and June highs against the yen and Canadian dollar, respectively, and motored to its strongest in over two years against the euro and sterling. The dollar took comfort from the Fed maintaining an upbeat outlook for the world’s biggest economy. Dollar bulls were particularly emboldened by the Fed ruling out a “lengthy” rate cutting cycle, dubbing its action as a mere “mid-cycle” rate adjustment. Markets responded by scaling back expectations of lower U.S. interest rates, thereby assigning a brighter outlook for the greenback. The dollar faces more tests of strength in U.S. data today on manufacturing and tomorrow on the job market.

EUR

A hawkish rate cut from the Fed this week drove the euro through a key floor to its weakest level in 26 months against the greenback. Meanwhile, data Thursday confirmed the weak state of Europe’s manufacturing sector, a key growth engine for the export-driven economy. European numbers this week showing lower inflation and a sputtering factory sector intensified pressure on the ECB to deliver stronger stimulus at its next meeting in September.

GBP

Sterling resumed a slide against the greenback that knocked it to 2 ½ year lows. No Bank of England rescue for the pound, as all nine officials voted to keep interest rates at a low 0.75%. Britain’s central bank also downgraded its outlook for U.K. growth this year in the face of turn for the uncertain Brexit has taken. The world’s No. 5 economy, meanwhile, remained stuck in a soft patch as data confirmed British factory activity contracted from the third time in as many months in July.

CAD

Canada’s dollar tumbled to six-week lows against the greenback after the Fed cut rates but played down prospects of a “lengthy” easing cycle. USDCAD’s buoyancy will face scrutiny in U.S. and Canadian data Friday on trade. However, the main focus tomorrow will be on America’s employment report for July. Solid job growth would weaken the case for the Fed to follow up this week’s rate cut with another anytime soon, a scenario that could push USDCAD higher.

America’s dollar reigned as it rolled to new highs for the year against a wide swath of rivals. Any rate cuts by the Fed appear to be modest instead of the bolder cuts that market had priced in. The Fed cut rates this week for the first time in years but it signaled the move was more insurance to safeguard the economy from global headwinds. The Fed upended market expectations of three or more rate cuts by year-end, resulting in a brighter outlook for the greenback. How high the bar is actually set for rate cuts should hinge on U.S. data. That puts the focus on today’s ISM manufacturing index and tomorrow’s influential nonfarm payrolls report. Prints that back the Fed’s favorable baseline outlook for the U.S. economy would bode well for sustainable dollar gains.

 

July 25, 2019 (Western Union Business Solutions)  – The euro slumped to two-year lows after the ECB all but eased policy at its latest meeting. The ECB left its main interest rate at zero and the deposit rate at minus 0.40%. The ECB affirmed its low rate pledge, vowing to keep rates low for at least another year or for as long as it takes to boost growth and inflation. Barring a surprise brightening in the outlook for Europe’s economy, the stage appears set for rate cuts or other action at the next ECB meeting on Sept. 12. The euro’s tenacity so far to hold above key support triggered a short-covering rally in its favor.

GBP

The U.K. pound held its chin above 27-month lows as the market digested the cabinet makeup of Britain’s newly installed prime minister, Boris Johnson. Britain’s new leader appeared to assemble a team of mostly Brexiteers, or those who favor the U.K. leaving the EU. Underlying sentiment remains bearish for sterling after weak U.K. data offered more evidence of a decelerating economy. A gauge of consumer spending fell for the third month in a row in July, a sign that an expected slowdown in the second quarter may have bled into the third quarter.

CAD

Canada’s dollar found some footing as the price of oil rose toward $57. USDCAD largely kept to a range as traders monitored the ECB’s policy announcement and hunkered down for critical U.S. data on growth and inflation that will offer the last meaningful looks at the world’s biggest economy before next week’s Fed meeting.

USD

The U.S. Dollar Index climbed to late May highs on the back of bullish U.S. data and a dovish policy decision from the ECB. Weekly jobless claims and durable goods both surprised to the upside with the former back around half-century lows. The strong data suggested any rate cuts by the Fed would be the modest insurance variety and not the start of a full blown easing cycle. Look for America’s rate debate to be stirred by second quarter growth Friday and numbers next week on consumer spending and inflation.

 

 

 

 

June 19, 2019 (Western Union Business Solutions)  – The U.S. dollar fell after the Fed left interest rates unchanged but issued a dovish statement that validated market expectations of multiple rate cuts by year-end. As expected, the Fed left its main rate in a range between 2.25% and 2.50%.

The Fed’s interest rate forecasts ran the gamut with eight officials anticipating lower rates, eight expecting no change, and one seeing a rate hike by Christmas.

The Fed’s new forecasts for the U.S. economy this year left its growth outlook unchanged at 2.1%, while it expects lower unemployment (3.6% vs 3.7% in March) and lower underlying inflation (1.8% vs 2.0%).

The Fed said it would “act as appropriate” to help defuse threats to the economy from slowing global growth and trade wars.

Key for the dollar and Fed policy going forward will be coming data on June employment and second quarter growth and next week’s Trump-Xi meeting.

The market is pricing about an 85% likelihood of the Fed cutting rates when it announces its next decision on July 31.

Fed Chairman Jerome Powell is about to address the media so it may be a while before the dust settles on the central bank’s decision. But once it does settle, the market will be left with a U.S. central bank that may not be as dovish as rivals in Europe and elsewhere, a dollar-positive notion.

 

 

June 7, 2019 (Western Union Business Solutions)  – The US economy  added lesser than expected  75k jobs in May sending the USD lower today, while  stronger than forecast Canadian hiring last month catapulted the loonie to 1 ½ month peaks against the greenback.

Canada’s economy appears to be bouncing back after a slowdown after data showed an addition of 27,700 jobs in May, a print more than three times better than forecasts of a gain of 8,000. Unemployment fell to a record low of 5.4%. Wages grew at a steady 2.6% annual clip. The news depicted a resilient economy and lowered the risk of the Bank of Canada cutting interest rates this year. Higher oil above $53 was also loonie-positive.

The dollar index crashed to late March lows after weak hiring dialed up pressure on the Fed to cut interest rates. America added only 75,000 jobs in May, a print far below forecasts of 185,000. Unemployment held at a 50-year low of 3.6%. But wage inflation moderated by a tick to 3.1%. The drop off on hiring was consistent with slower second quarter growth and offered evidence of downside risks to the economy from trade wars materializing. Today’s overall lackluster jobs report suggested a higher risk of the Fed cutting rates from 2.5% at a coming meeting with its next decision due June 19.

The euro’s more than 1% gain for the week had it on pace for its best performance of 2019. The euro capitalized on dollar weakness and an ECB decision this week that was perceived as less dovish than expected. A general lid may be fastened on the euro, however. That’s because gauges of long-term inflation expectations in the euro zone have fallen, a situation that if sustain would increase pressure on the ECB to strengthen stimulus.

 

May 31, 2019 (Western Union Business Solutions)  – Trade tensions kicked into a higher gear Friday to the benefit of the yen and the detriment of the Mexican peso. America’s dollar was mixed but mostly subdued as losses of nearly 1% against the yen overshadowed new highs versus rivals from the U.K., Canada and Mexico. The euro ticked higher though its rise lacked conviction. President Trump threw another log on the fire of global risk aversion after he announced new tariffs on Mexican imports in a bid to stop migrants from crossing the southern border. The news heightened fears of aggressive trade policy slowing growth in the U.S. and globally, sending stocks and oil markets swooning, and investors ducking for cover in safer currencies like the yen, Swiss franc and greenback. A slew of U.S. data to close out the month could add to the rise in market volatility.

Euro scores a technical victory 

The euro largely treaded water as gains against sterling translated into general support. The euro’s ability to keep above support allowed for a technical victory. Still, bouts of euro strength have lacked conviction on account of the bloc’s underperforming economy and concerns about Italy, the euro zone’s debt-choked No. 3 economy. Next week looms large for the euro with big-ticket euro zone data Tuesday on inflation and unemployment which could serve as a preview to Thursday when the ECB issues as policy update. Weaker inflation would increase the risk of the ECB at least laying the ground work for another round of euro-negative stimulus.

Goodbye May, hello new lows

Sterling capped off one of its worst months in a year with a slide to fresh January lows against the greenback. Key support for the pound gave way, a reflection of growing fears of Britain crashing out of the EU without a trade agreement. GBPUSD is down about 3.4% this month, putting it on course for its worst month in about a year.

Peso tumbles to 2019 lows

Mexico’s peso crashed to 2019 lows after the outlook for the nation’s economy darkened after President Trump announced a new 5% tariff on everything that Mexico sends above the border. The risk-averse backdrop compounded the peso’s plunge with the Mexican currency down nearly 3% plunge to December 2018 lows against the greenback.

Yen soars to 4-month peaks

A nearly 1% surge in the yen drove it to four-month peaks against the greenback. The yen is the initially winner of America’s decision to announce new tariffs, this time on its southern neighbor. Global risk aversion sent U.S. Treasury yields to new lows, making the greenback a less appealing bet.

Loonie pares losses after data  

Canada’s dollar pared losses after it notched new five-month lows. Canada’s economy ticked higher during the first quarter but the 0.4% pace of annual growth, which followed a 0.3% rate in Q4, fell short of forecasts. While disappointing, it helped that March growth (0.5% vs expectations of 0.3%) proved stronger than expected and suggested the economy entered the second quarter with more momentum. The data largely fit with the view of faster second quarter growth. Oil down more than 2% and around $55 doesn’t bode well for commodity currencies.

Cool runnings: U.S. inflation

The dollar favored its back foot after tame U.S. inflation depicted an opening door to a Fed rate cut. Consumer incomes rose and their spending increased but inflation remained scant with core prices up an annual rate of 1.6% in April, several notches below the Fed’s 2% goal. While the dollar has outperformed and raced to two-year highs, the latest trade frictions carry a negative element for the greenback. The potential hit to U.S. growth from trade conflicts has the market increasingly convinced that the Fed may need to slash borrowing rates at least once this year to ward off recession risk.

 

 

 

May 22, 2019 (Western Union Business Solutions)  – The euro was broadly steady with many players keeping to the sidelines on the eve of European elections. All eyes will be on how far right candidates fare in the Thursday to Sunday voting. Meanwhile, the euro’s winning streak against the embattled U.K. pound was on the cusp of a record. Another win today for EURGBP would mark the 13th consecutive day, the longest since the single currency’s inception in 1999. A wild card for the euro: Thursday data on German factory growth, seen contracting for a fifth straight month.

GBP

Sterling deepened a slide as it fell to new lows, hitting its weakest in more than four months against the greenback. Against the euro, sterling was on track for a record 13th straight day of losses. While down the pound may not be out, especially if Brexit should ultimately get called off. Still, heightened uncertainty over all things U.K. politics suggests that things could get worse before they get better for the pound. Meanwhile, underwhelming U.K. inflation today didn’t do the pound any favors as it argued against Britain raising interest rates anytime soon.

CAD

Canada’s dollar surged to one-month highs after bullish consumer spending suggested the Bank of Canada would not entertain an interest rate cut from 1.75% when it meets on May 29. Retail sales jumped by 1.1% in March, exceeding expectations. Adding to the report’s rosy glow, spending in February got revised higher. The data offered evidence of how months of strong hiring and low unemployment have started to translate into meaningful consumer spending, a good sign for first quarter growth, due on May 31.