Strong employment numbers push the U.S. dollar higher and the Loonie falls

OFX Daily Market News

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USD – United States Dollar

According to the Bureau of Labor Statistics, total non farm payroll employment rose by 266k in November; the expected number was 181k. The U.S. dollar jumps 0.2 percent versus the Euro and 0.6 percent versus the Canadian dollar because, at the same time in Canada, employment numbers came in weaker than expected. The unemployment rate in the U.S. came in at 3.5 percent versus 3.6 percent, which was much better than expected. The labor force participation rate was little changed at 63.3 percent in November. The U.S. dollar is also outperforming the Pound and Swiss Franc by 0.2 and 0.3 percent.

On the trade agreement front, Trump is again showing his unpredictability as he stated trade talks with China were “moving right along” only two days after pouring cold water on outlook. We may see phase one of a deal or at least a delay in tariffs rising by the 15th December, which is when the next round of tariff hikes is due. Equity markets around the world are higher as a result.

Key Movers

Canada lost 71 k jobs in November and the unemployment rate rose to 5.9 percent, the highest rate since the 6 percent reported in August 2018. The losses happened in the manufacturing and public administration sectors. The Canadian unemployment rate rose by 0.4 percentage points to 5.9 percent. According to Statistics Canada, goods-producing industries saw a decline of 26 k net jobs, mainly in manufacturing, and the service sector lost 44 k net jobs. This is creating doubt amongst market participants regarding the Canadian economy. BoC Deputy Governor Timothy Lane said that a strong labor market underpins the economy, but is he right?

Expected Ranges

USD/CAD: 1.3219 – 1.3265 ▲

EUR/USD: 1.1051 – 1.1090 ▼

GBP/USD: 1.3100 – 1.3203 ▼

AUD/USD: 0.6803 – 0.6858 ▲

NZD/USD: 0.6542 – 0.6580 ▲


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Recent Aussie data missed the market’s expectations

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AUD – Australian Dollar

The Australian dollar is slightly weaker this morning when valued against the Greenback. The AUD/USD pair traded between 0.6854 – 0.6820 on Thursday but remained within familiar levels and not far from its weekly high. On the release front yesterday the Australian retail sales turnover was relatively unchanged (0.0 per cent) in October, seasonally adjusted, according to the latest Australian Bureau of Statistics (ABS) Retail Trade figures. We also saw the release of Trade Balance data for the month of October. The October Trade Balance surplus was of 4502M, well below the 6100M expected, with exports down by 5.0% in the month, and imports unchanged.

Looking ahead today on the data front and we will see the November AIG Performance of Construction Index, previously at 43.9. From a technical perspective, the AUD/USD pair is currently trading at 0.6835. We continue to expect support to hold on moves approaching 0.6800 while now any upward push will likely meet resistance around 0.6865.

Key Movers

The Greenback fell for a fifth straight session on Thursday, undermined by recent weaker-than-expected U.S. economic data and this week’s robust performance by the euro and the British pound. On the release front yesterday in the US the trade deficit came in better than expected to its lowest level in nearly 1-1/2 years in October to $47.2 billion, the smallest since May 2018. Initial claims for state unemployment benefits, on the other hand, dropped 10,000 to a seasonally adjusted 203,000 for the week ended Nov. 30, the lowest level since mid-April. Looking ahead to Friday’s employment data release and the US economy is expected to have added 180K new jobs in November after adding 128K in October. The unemployment rate is foreseen steady at 3.6%, while wages’ growth is also seen within familiar levels, up by 0.3% MoM and by 3.0% when compared to a year earlier.

Expected Ranges

AUD/USD: 0.6730 – 0.6930 ▼

GBP/AUD: 1.9150 – 1.9350 ▲

AUD/NZD: 1.0350 – 1.0550 ▼

AUD/EUR: 0.6050 – 0.6250 ▼

AUD/CAD: 0.8900 – 0.9100 ▼


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The U.S. dollar falls following weak PMI data and awaiting employment numbers tomorrow.

OFX Daily Market News

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USD – United States Dollar

The U.S. dollar continues falling, for instance, the U.S. dollar index has fallen 0.13 and its most crucial component, the USD/EUR pair has fallen around 0.17 percent. Fundamentally speaking, this is likely due to the disappointing PMI data, which are still fresh in market participants’ minds with disappointing PMI data readings, but the most critical piece of information will be released tomorrow, Non-Farm Payrolls. A stronger than expected NFP report and an increase in average hourly income in tomorrow’s release will be helpful to repair some damage done by the PMI data to the U.S. dollar. Economic activity in the non-manufacturing sector grew in November for the 118th consecutive month, but it came at 53.9 versus the expected higher number of 54.5. It also was 0.8 percentage points lower than the October reading of 54.7 percent.

There are rumors that the U.S. and China are moving closer to agreeing on the number of tariffs that would soften in a phase-one trade deal and despite the recent tensions over Hong Kong and Xinjiang (see the bounce of global equity markets to find clues). So the capital markets mood is much better this morning, helping currencies such as the Canadian dollar, Swedish krona, and Norwegian krone to rise. For now, it seems that the U.S. dollar is not responding to trade deal news anymore. However, there’s still an awful lot that can go wrong in trade negotiations that would cause the U.S. dollar to move in any direction. Historical charts indicate the greenback would move lower if there is no phase one agreement by December 15th.

Key Movers

The BoC maintained its target for the overnight rate at 1.75 percent, and their projection for global economic growth appears to be the same, which helped market participants to have a positive attitude towards the Loonie. According to the BoC, there is evidence that the global economy is stabilizing, with growth still expected to edge higher over the next couple of years. The BoC clarified though that growth in Canada slowed in the third quarter of 2019 to 1.3 percent, in line with expectations. Consumer spending expanded moderately, housing investment was also a source of strength, exports contracted, driven by non-energy commodities, and investment spending unexpectedly showed strong growth. Finally, CPI inflation in Canada remains at the BOC’s target, and measures of core inflation are around 2 percent.

Early today, BoC deputy governor Timothy Lane caused the USD/CAD pair to fall another 16 pips to 1.3159 (stronger Loonie). Regarding yesterday’s close, the USD/CAD is declining by 0.3 percent. However, Loonie’s rally versus the U.S. dollar was over 0.7 percent yesterday, which makes, at least, a 1 percent appreciation of the Loonie in two days at the time of this writing.

Lane said that the Canadian economy remains flexible despite the global uncertainty caused by the trade war; he added: “It is because of this strength amid the turmoil that we say Canada is resilient, although not immune.” He emphasized there is no reason for the BoC to move in step with the U.S. Federal Reserve.

Expected Ranges

USD/CAD: 1.3146 – 1.3191 ▼

EUR/USD: 1.1066 – 1.1117 ▲

GBP/USD: 1.3120 – 1.3203 ▲

AUD/USD: 0.6816 – 0.6849 ▼

NZD/USD: 0.6505 – 0.6545 ▼


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Aussie Lifts On Trade Hopes

OFX Daily Market News

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AUD – Australian Dollar

AUD outperformed against most of its major peers as the currency managed to pare losses on the back of yesterday’s GDP (QoQ) miss. AUDUSD rebounded from yesterday’s low of 0.6813, hitting a high of 0.6862 as U.S. negotiators announced that they expect a phase-one deal to be completed before American tariffs rise on December 15.

With AUDUSD currently sitting at 0.6850, key levels of intra-day support to watch are 0.6833 (Daily Fibonacci 23.6%) and 0.6812 (50 & 100-Day Moving Average). Resistance sits at 0.6876 (Daily Fibonacci 50%) and 0.6917 (200-Day Moving Average).

Australia’s Trade Balance and Retail Sales for October are due to be released later this morning. It is expected that the Trade Balance will contract for October to A$6.5 billion, in which the drop-in gold prices over October are likely to lead to a marginally smaller trade surplus from Septembers A$7.5 billion. Meanwhile consensus is expecting Retail Sales to remain subdued at +0.3% MoM. Tonight, we also see the release of Trade Balance, Factory Orders and Initial Jobless Claims data in the U.S.

Key Movers

Trade continues to remain the bottom line for equities, which snapped a 3-day losing streak amid renewed hopes that a deal could be reached by the December 15 deadline. The prevailing media narrative is of constructive negotiations belied by President Trump’s recent remarks that a deal could be postponed till next year. The S&P 500 upside was led by Energy and Financials shares, which were among the biggest laggards over the 3-day selloff this week.

Elsewhere, bonds weakened as risk appetites returned. With risk back on, AUD, CAD & NZD in the FX space shined, with safe haven currency’s JPY and CHF retreating.

Finally, the US Dollar Index continued to drift lower after the ISM services composite fell 0.8 points in November to 53.9, reversing some of October’s 2.1 point increase. The US Dollar Index managed to break its key 200-Day Moving Average support level for only the 5th time this year. The break of the support level now paves the way for a further drop to its next support level of 97.34 (Daily Fibonacci 50%), currently sitting at 97.60.

Expected Ranges

AUD/USD: 0.6810 – 0.6875 ▲

AUD/EUR: 0.6160 – 0.6205 ▲

GBP/AUD: 1.9040 – 1.9200 ▼

AUD/NZD: 1.0465 – 1.0560 ▲

AUD/CAD: 0.9000 – 0.9085 ▼


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Dominating trade news and weaker employment numbers push the U.S. dollar to a new one month low

OFX Daily Market News

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USD – United States Dollar

The U.S. dollar continues falling in sync with the negative mood in the FX market. President Trump said from London that he wouldn’t sign a deal unless it’s a “good deal” and added, “I have no deadline.” He told the reporters that they’ll find out “pretty soon” whether there’ll be a deal, referring to the U.S. – China trade war deal. He also said that in some ways, it’s better to wait until after the 2020 election. The U.S. dollar accelerated its sell-off as Trump’s comments were reinforced by Commerce Secretary Wilbur Ross, who said the U.S. would go ahead with more tariffs on Chinese goods on Dec. 15th if nothing changes in the next two weeks. He added, “There is always the chance of a breakthrough.” The issue did not seem to improve regarding the trade war when the House of Representatives imposed sanctions on Chinese officials over human rights.

On the economic release side, private employers added the fewest jobs in six months in November; the ADP non-farm employment change came in at 67K versus the expected number of 137 k, according to the ADP National Employment Report. According to Reuters, the median forecast among economists polled by Reuters called for a gain of 140,000 jobs, which is the lowest monthly gain since May, when 46k jobs were created. This was the second catalyst for a weaker U.S. dollar. The EUR/USD increased an additional of 20 pips toward the 1.1100 handle from 1.1080 -an already high level after the U.S.-China trade war updates – representing a 0.18 percent increase.

Key Movers

The Bank of Canada (BoC) is scheduled to announce its latest monetary policy in a few minutes (10:00 am EST). The BoC is expected to leave its benchmark interest rates unchanged at 1.75 percent at their December policy meeting. It is good to know though that the most important issue to follow is the tone in the accompanying policy statement. A small change could undoubtedly move the Loonie in one direction very quickly. For now, the USD/CAD pair falls 0.21 percent, towards 1.3267 after the U.S. and China seem closer to agreeing on the amount of tariffs to be rolled back in a phase-one trade deal, even amid increasing tension.

Overnight, the Australian Q3 GDP missed its target, showing 0.4 percent, while 0.5 percent was being eyed. However, the sting was relieved somewhat with Q2 being revised upwards from 0.5 percent to 0.6 percent.

It has been another good start to the day for the British Pound, as next week’s general election draws ever closer. At the time of this writing, the GBP/USD pair already broke the 1.3000 level, and it is trading at 1.3094, 0.80 percent higher. It also reached a new high of 1.3110 for a few minutes.

Expected Ranges

USD/CAD: 1.3191 – 1.3311 ▼

EUR/USD: 1.1092 – 1.1131 ▲

GBP/USD: 1.3081 – 1.3142 ▲

AUD/USD: 0.6831 – 0.6859 ▲

NZD/USD: 0.6512 – 0.6542 ▲


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AUD improves on the back of RBA announcement

OFX Daily Market News

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AUD – Australian Dollar

The Australian dollar saw a nice gain during Tuesday’s trading session on the back of the RBA cash rate announcement yesterday. Hitting a one week high of 0.6861 against the USD, the RBA statement was not as dovish as traders were expecting, with the Bank suggesting they are looking to be patient of its 75bps of easing before adding any further stimulus.

The Australian Bureau of Statistics will release their quarterly GDP data just before midday today. Expected to have a major impact on the AUD, it shows the change in the inflation-adjusted value of all goods and services produced in the economy.

The AUD opened at 0.6845 this morning against the USD.

Key Movers

The USD has weakened against most other currencies on the back of recent talks regarding the US-China trade deal. President Trump imposed import tariffs of 2.3bn worth of French goods in retaliation for the tax imposed by Paris on the sales of digital services providers, commenting that “I’m not going to let anyone take advantage of American companies. If anyone is going to take advantage of American companies, it’s going to be us”.

Overnight we saw the US Manufacturing PMI data come back less than expected at 48.1 against a forecasted 49.2. Showing the level of diffusion index based on surveyed purchasing managers in the manufacturing industry, the negative data implies industry contraction.

Over in Canada we can expect to see some movement with the rate statement and overnight rate announcements being released after midnight tonight. With the interest rate expected to stay at 1.75%, this is usually already priced into the market but tends to be overshadowed by the rate statement which is focused on the future and discusses the economic conditions that influenced their decision.

Expected Ranges

AUD/CAD: 0.9055 – 0.9175 ▲

AUD/EUR: 0.6105 – 0.6260 ▲

GBP/AUD: 1.8830 – 1.9235 ▲

AUD/NZD: 1.0430 – 1.0590 ▼

AUD/USD: 0.6755 – 0.6945 ▲


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The Greenback falls after Trump says he is prepared to wait for the US-China trade deal

OFX Daily Market News

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USD – United States Dollar

The Greenback is falling this morning in sync with equity markets, around 0.14 percent (US dollar index). However, the USD/CAD, is rising 0.08 percent, trading at 1.3318 (weaker Loonie).

As you will see below in the “key movers” section, the Aussie dollar and Pound have their own idiosyncratic drivers, but, in North America, the main driver for the Greenback is US President Donald Trump. The North American capital market got hit again after Trump hinted at a delay in the trade deal by mentioning that he is prepared to wait for the U.S.-China trade deal. Furthermore, by the end of the trading day yesterday, Trump proposed duties on French goods over a tech tax, which added to the negative mood when he restored tariffs on steel from Brazil and Argentina yesterday. Additionally, he threatened to increase levies on Chinese goods if a phase one deal can’t be reached between the US and China. This situation is creating anxiety in the FX market. Crude oil is falling almost 1 percent this morning, and market participants are waiting for the BoC rate statement tomorrow morning.

Technically speaking, the EUR/USD pair is trading higher (the US dollar falls) starting this week due to the drivers mentioned above. The Euro is not a safe haven, but it sometimes acts as one due to the negative correlation of the US dollar and gold. The EUR/USD pair has a resistance level at the 1.1100 handle, but it might even hit 1.1150 if gold continues rising in this market environment. It is essential to mention that the EUR/USD is finding buyers below the 1.1000 handle, but it is still on a downtrend. Only if the EUR/USD pair breaks the 200 moving average that is currently resting at 1.1162, could we say that the EUR/USD, the most liquid FX pair, has changed its trend.

Key Movers

The Aussie dollar climbs to a three-week high after the central bank leaves rates unchanged and says some global risks have eased recently. The Australian central bank -RBA- sees price pressures picking up gradually to around 2 percent in 2020 and 2021. Intermediately after the RBA announcement, the AUD/USD pair jumped from 0.6818 towards 0.6862, a 1-month new high, representing a 0.64 percent increase, leaving its growth and inflation forecasts unchanged.

The British Pound continues to trade higher, the GBP/USD pair trades at the 1.3000 handle representing a 0.45 percent increase. It appears as though it is trying to reach the October 21st high of 1.3013. The main driver is a polling consistently showing the Tory’s are looking likely to get a majority at next week’s general election. Furthermore, today starts two days of NATO meetings being hosted in the UK with US President Donald Trump in attendance; however, it is likely to be general election news/polling that will have the most impact on the Pound.

In the Euro Zone, industrial producer prices increased by 0.1 percent, while 0 percent was expected. The EUR/USD pair was trading flat after the announcement, probably because it had already gone higher yesterday due to the risk-off environment. ECB President Christine Lagarde said in her first testimony to the EU parliament that the ECB would be determined in hitting its inflation mandate and added that an upcoming strategy review would be “open-minded.”

Expected Ranges

USD/CAD: 1.3293 – 1.3333 ▲

EUR/USD: 1.1060 – 1.1108 ▲

GBP/USD: 1.2975 – 1.3018 ▲

AUD/USD: 0.6813 – 0.6866 ▲

NZD/USD: 0.6493 – 0.6550 ▲


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Aussie jumps 1% to break through 0.68

OFX Daily Market News

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AUD – Australian Dollar

The Aussie kickstarted the first week of December with a rise of almost 1% to open this morning at 0.6823. After a lacklustre last week of November, the Aussie finally received some much-needed positivity by initially finding some support from Australia’s largest trading partner China. China’s Manufacturing PMI was released over the weekend and reported a better than expected result. Following the result, China also released the Caixin PMI which also came in above expectations. Overall, the Chinese manufacturing sector grew at its fastest pace since December 2016, which in turn, sent the Aussie upwards. Pushing the Aussie into overdrive however was a significant fall in the value of the Greenback. The United States dollar fell across the board after the US ISM manufacturing survey came in weaker than expected. With support from China and a fall in the USD, the Aussie had one of its best days over the last few weeks.

Moving into Tuesday, the Aussie now turns to the RBA for direction with the release of their cash rate decision and accompanying rate statement set for release at 2:30PM AEDT today. While the decision is widely expected to be a hold for December, the market will take keen interest in the rate statement for any insights into the RBA’s rate guidance.

Key Movers

A weaker than expected ISM Manufacturing Survey in the United States sent FX markets into overdrive as the Greenback fell significantly across the board. The ISM survey reported a reading of 48.1 against an expected 49.2, a large miss all in all. Despite the poor ISM survey result, there was a rise in the less followed US Final PMI survey to 52.6. Nevertheless, the US Dollar Index tumbled 0.45% to open this morning at 97.84.

Staying with the United States, the December 15th deadline continues to linger in the back of the markets mind with any news of the US-China trade war continuing to dominate market sentiment. Overnight, Wilbur Ross told Fox News that “if nothing happens between now and then, the President has made it quite clear he’ll put the tariffs in – the increased tariffs”. The adversarial mood did not help the tenuous situation.

Expected Ranges

AUD/CAD: 0.9034 – 0.9114 ▲

AUD/EUR: 0.6122 – 0.6186 ▼

GBP/AUD: 1.8929 – 1.9029 ▲

AUD/NZD: 1.0454 – 1.0524 ▼

AUD/USD: 0.6779 – 0.6848 ▲


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The U.S. dollar falls following positive numbers in China and Europe.

OFX Daily Market News

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USD – United States Dollar

Just as we were expecting a peaceful period over the holidays, President Trump tweeted that he would restore steel and aluminum tariffs on goods imported from Argentina and Brazil this morning. According to Trump, his rationale was that the tariffs would be in return for the weakening of their currencies. He also attacked the Fed again, saying that they should lower rates, so that countries such as Argentina or Brazil no longer take advantage of the strong U.S. dollar by further devaluing their currencies. The Argentinian and Brazilian currencies are freely traded, and they have been in devaluation mode over the last few months, especially the Argentinian Peso, which has been punished for its weak economic growth and the expectation that its new government will default on outstanding bond payments.

Later this morning, the ISM’s manufacturing report will be released and it will provide critical insight on whether things are improving or getting worse in the U.S. manufacturing industry.

Key Movers

Regarding China’s retaliation to the U.S. bill supporting pro-democracy movements in Hong Kong, a Chinese Foreign Ministry spokeswoman said sanctions would be put on U.S. human-rights organizations operating in China. The statement promised that China would take, “…further necessary actions,” without providing further details. On the economic release side, China showed stronger output after the Caixin manufacturing index rose to 51.8, while the forecast was 51.5. The good news in the Chinese economy along with positive news in the Euro-zone factory activity (which rose to a three-month high last month) have helped the Euro to increase against the U.S. dollar, Canadian dollar, and British Pound by 0.15, 0.32 and 0.24 percent respectively at the time of this writing.

Expected Ranges

USD/CAD: 1.3266 – 1.3311 ▲

EUR/USD: 1.0989 – 1.1053 ▲

GBP/USD: 1.2900 – 1.2975 ▲

AUD/USD: 0.6788 – 0.6810 ▲

NZD/USD: 0.6465 – 0.6500 ▲


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Australian Dollar subdues ahead of Tuesday's RBA rate decision

OFX Daily Market News

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AUD – Australian Dollar

The Australian Dollar failed to break 68c last week and remained range bound between 67c and 68c vs its US counterpart. Having initially touched 0.6799 on Monday, the AUD/USD witnessed a gradual decline to touch an eventual low of 0.6754 Friday night. Not helping in its fight we had weak local data which saw a report released on Friday by the Housing Industry Association (HIA) said new home sales declined 0.5%, after posting back-to-back gains. Meanwhile, Private Sector Credit grew by 2.5 percent but missed expectations of a 2.8 percent rise, overall the financial aggregates data released by the Reserve Bank of Australia indicated overall credit rose 2.5 per cent in the 12 months to October being the lowest since April 2010.

The local unit might be able to look past the US-China trade story for just minute as we see raft of economic data released this week. We start today with the release of AIG Manufacturing Index, MI Inflation Gauge and Building Approvals which are forecasted to drop by 1% in November. Tomorrow is the last RBA monetary policy decision of the year where we are expecting no change to the official cash rate and for it to remain at 0.75%. The AUD/USD opens this morning at 0.6760, we see initial support at 0.6730 followed by 0.6700. The market faces near term resistance at 0.6800 followed by 0.6830.

Key Movers

The US Dollar Index which measures the Greenbacks strength against a basket of six major currencies was steady on Friday in holiday-thinned trade after Thursdays Thanksgiving, the DXY closed the week at 98.28. The GBP/USD inched up and closed the week at 1.2942, for most of November, the pair has been holding above the 23.6% retracement of the October rally at around 1.2820, although below the mentioned high, and needs to break one of those to find directional strength. With the UK election just 10 days away the Conservative Party’s lead over Labour has dropped slightly. The Tories have experienced a drop of one point to 46%, while Labour has gained three points to 31%, the Liberal Democrats are up one point to 13%, while the Brexit Party is down one point to 2% according a local UK survey.

Expected Ranges

AUD/USD: 0.6700 – 0.6800 ▼

GBP/AUD: 1.8900 – 1.9200 ▲

AUD/NZD: 1.0500 – 1.0600 ▼

AUD/EUR: 0.6100 – 0.6170 ▼

AUD/CAD: 0.8920 – 0.9000 ▼


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