January 4 2019

Jan. 4, 2019 (Western Union Business Solutions)  – The U.S. dollar ticked lower as risk appetite improved after a gangbusters U.S. jobs report tempered worries of a moderating economy and validated Fed forecasts of higher interest rates this year. America added a whopping 312,000 jobs in December, the most in 10 months. Unemployment rose by two ticks above 49-year lows to 3.9% but for good reason as it reflected a larger workforce. Wages unexpectedly increased, rising to an annual rate of 3.2% versus forecasts of 3.0%. While constructive for the dollar, the data won’t remove the cloud of political uncertainty over Washington amid a partially closed U.S. government, which suggests limited upside for the buck.




Sterling caught a boost after U.K. services data topped expectations, an outcome that surprised to the upside and helped the pound recover from a flash crash-induced slide this week to April 2017 lows. Britain’s economy-driving services industry closed out 2018 on firmer footing with the PMI rising to 51.2. Support from the data may not last long for sterling given the still unsettled situation in Britain over Brexit.




The euro fell after bullish U.S. jobs data stood in contrast to weaker inflation numbers from Europe that kept a near-term rate hike by the ECB off the table. Inflation in the euro bloc slowed to an annual rate of 1.6% last month, down from 1.9% in November, the weakest in 8 months. The less volatile core number steadied at a low 1%.




Canada’s dollar rose above 1 ½ year lows thanks to stronger oil markets and faster hiring last month. Canada added 9,300 jobs in December, above forecasts of 5,500, though a marked slowdown from the record spike of more than 94,000 in November. Unemployment stayed at 5.6% compared to forecasts of a modest uptick. A closer look at the data showed that all of the hiring came from the less meaningful part-time positions, suggesting limited support to the loonie.