Upbeat data out of the eurozone overshadow risk-off sentiment sending dollar lower
The dollar weakened versus most G-10 peers as upbeat data out of the eurozone overshadowed the market’s risk-off tone. Both UK and eurozone PMI revisions rose, strengthening their currencies. Haven assets, including gold, the Japanese yen and Swiss franc, advanced showing a soured market sentiment following escalation in tensions between the US and Iran.
Economic Data this Week
Monday: US Markit PMI later this morning
Tuesday: US Durable Goods
Wednesday: GE Factory Orders, FR Consumer Confidence
Thursday: US Jobless Claims, GE Industrial Production
Friday: US Nonfarm Payrolls, FR Industrial Production, CA Unemployment
January 6, 2020
EUR/USD 1.1195 GBP/USD 1.3142 USD/CAD 1.2986 AUD/USD 0.6938 USD/JPY 108.12 USD/CNH 6.9737 USD/ILS 3.4754 USD/MXN 18.85 USD/CHF .9697 USD/INR 71.94
The dollar slipped against most G-10 peers amid tensions with Iran. Investors flocked to safer asset classes including the Japanese yen, Swiss franc and gold. Spot gold prices rose to the highest level in 7 years. Markets will closely watch Friday’s employment data where a gain of 160K non-farm payrolls is expected.GBP
The pound also advanced nearly half a percent versus the dollar after UK Services PMI was revised up to 50.00 – a sign the UK economy is not as weak as initially thought. This week, British lawmakers will reconvene to further debate the EU divorce deal PM Johnson has agreed with Brussels.EUR
The euro advanced after Eurozone Services PMI beat estimates and rose to 52.8 in December.CAD
Despite crude oil prices topping $70 a barrel, the loonie did not strengthen. Industrial Product Price Index rose 0.1% in November after being unchanged in October beating expectations of a 0.5% decline.ASIA/PACIFIC
The Japanese yen rose to 3-month highs versus the dollar on haven status buying following rising tensions between the US and Iran.
On trade watch, a delegation from China has tentative plans to travel to Washington on 13 January to sign phase one of a trade pact.
For more analysis on FX markets or information regarding SVB's FX services:
See all of SVB's latest FX information and commentary at www.svb.com/trends-insights/foreign-exchange-advisory