Global central banks seen adding liquidity in the face of uncertainty causing the US dollar to lose some of last week’s gains.
Financial market news is dominated by the coronavirus as tens of millions of Chinese workers return to work after an extended break for Chinese New Year's celebrations which was prolonged due to the virus outbreak.
Economic Update for this week:
Tuesday: Fed Chair Powell to speak before the House Financial Services Panel
Wednesday: Fed Chair Powell to speak before the Senate Banking Panel
Thursday: CPI for January (forecast YoY of 2.4%) and wage data for January
Friday: Industrial Production and Retail Sales for January. University of Michigan Consumer Confidence for February
February 10, 2020
EUR/USD 1.0930 GBP/USD 1.2942 USD/CAD 1.3323 AUD/USD 0.6683 USD/JPY 109.72 USD/CNH 6.9887 USD/ILS 3.4256 USD/MXN 18.7933 USD/CHF 0.9770 USD/INR 71.2912
The dollar has risen 1.8% vs. the Bloomberg basket of currencies (BBDXY).
Non-farm payrolls numbers smashed forecasts on Friday, with the US workforce adding 225k jobs In January against a consensus of 165k. The unemployment rate ticked higher, offset by an increase in the participation rate. Wage growth increased to 3.1% YoY against an expected 3.0%. Market reaction was relatively muted despite the upward surprise, the yield curve flattened slightly and the dollar edged higher.GBP
The pound rebounded in overnight trading after touching the lowest point this year. GBP strength was largely attributed to overall US dollar weakness and traders buying back short positions when the pound briefly traded below 1.29. Weather disrupted UK services over the weekend, with a number of scheduled flights and trains cancelled as Storm Ciara unleased winds up to 100 mph.EUR
The euro continues to slide after political uncertainty and the coronavirus weighs on the common currency. Germany’s Angela Merkel lost her appointed successor when Annegret Kramp-Karrenbauer (AKK) quit as leader of the conservative party. Also, the Irish election over the weekend saw an unexpected surge in support for Sinn Fein.CAD
The Canadian dollar continues to weaken as the price of oil slips to levels not seen since the early days of 2019. Coronovirus uncertainly is being blamed for sinking commodity prices – namely oil and copper.ASIA/PACIFIC
The Chinese renminbi strengthened slightly as the central bank provided re-lending funds to keep the liquidity in China’s financial markets from becoming clogged with uncertainty surrounding the coronavirus. Consumer prices in China accelerated at the fastest pace since 2011 as food costs surged due to shortage fears.
Japan’s yen remained flat while China’s yuan and the Australian dollar edged higher against the greenback.