US Dollar Current Situation
The greenback is under heavy selling pressure as the North American market opens. The EUR is a star performer after the European Central Bank voted to maintain rates unchanged. The move was widely anticipated. The Governing Council however believes the current policy is set to stay longer, “at least through the first half of 2020” to support growth in the euro bloc. As market continues the digest the incoming news, the US dollar moves into negative territory. Fresh data showed unit labour costs in the nonfarm business sector decreased 1.6%. The four-quarter rate is now at its lowest since 2013. After Powell’s recent dovish comments, market is now pricing in a shift in monetary policy with imminent rate cut on the cards. Once the dust settles after the ECB decision, we expect market to move into consolidation ahead of key US non-farm payrolls data tomorrow.
CANADIAN DOLLAR
USD/CAD is losing ground after the release of softer nonfarm labour productivity this morning. The pair returns to oscillate around the 1.34 handle, looking for clear direction. Investors wait for key employment data due for release tomorrow before committing to further trading. WTI crude oil remains an outside driver and is currently steady around $52.00 after crashing to a five-month low.
EURO
EUR/USD is trading 0.6% higher after ECB Chief Draghi sounded surprising optimistic in his press conference. The Governing Council of the ECB kept interest rates unchanged in a widely anticipated move. Draghi however believes recent economic data are “not bad”, with low probability of a recession despite ongoing global trade tensions and Brexit uncertainty. Whilst market continues to assess the incoming news, we expect the shared currency to be choppy with a cap of further gains around 1.1300.
BRITISH POUND
GBP/USD is trading in positive zone, riding on broad-based US dollar weakness. There was no data out of the UK and the Pound is trading along general market sentiment. Brexit has taken a back seat for now but with the race for the PM seat wide open, we expect volatility to return in the coming sessions.
JAPANESE YEN
The Japanese Yen is trading firmer following the releases of lower than expected US data. Nonfarm productivity has stalled and unit labour cost missed market estimates. We however expect the pair to move into a consolidation mode around current levels ahead of tomorrow’s US employment data. FOMC member Williams speaks later today and any dovish tilt will likely inject more selling pressure on the US dollar.
