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Canadian dollar update – Monday February 10, 2020. Greenback reaches 4-month high after strong jobs data, but focus still on virus impact.

Canadian dollar update – Monday February 10, 2020. Greenback reaches 4-month high after strong jobs data, but focus still on virus impact.
Albert Edwards
by Albert Edwards on February 10, 2020

CURRENCY MARKET UPDATE

U.S. dollar highlights:

USD stronger after nonfarm payrolls increased by 225,000 jobs in January. Construction employment increased the most in a year also while average hourly wages improved 0.2% monthly and 3.1% annually. However, the jobless rate increased to 3.6% (from 3.5% previously). Concerns about a global growth slowdown and the coronavirus epidemic continue to weigh on markets and keep USD firm. All eyes this week on Federal Reserve Chairman Powell’s testimony starting tomorrow, Consumer Prices for January available Thursday and Retail Sales for last month available on Friday.

Canadian dollar highlights:

CAD weaker as the coronavirus scare continues to cause risk aversion. This outbreak has overshadowed the Bank of Canada’s dovish stance as the chances for a rate cut were reduced after strong jobs data last month. Unemployment rate in January decreased to 5.5% (from 5.6% in December). CAD remains defensive because markets are cautious and worried that low crude oil prices will continue due to low demand caused from the outbreak. All eyes this week on Bank of Canada Governor Stephen Poloz speaking on Thursday.

Euro highlights:

EUR weaker and drops to a four-month low after German industrial output for December dropped the most in a decade. In addition, strong U.S. employment data encouraged markets to prefer the greenback. EUR remains vulnerable to geopolitical events causing safe haven preference and expectations the central bank may cut interest rates soon. All eyes this week on President Christine Lagarde’s speech tomorrow and GDP Growth rate for Q4 available Friday.  

British pound highlights:

GBP continues weaker and defensive as markets have priced in the risk of a no-trade deal with the European Union by the end of this year. Prime Minister Boris Johnson said the U.K. will not obey the Eurozone’s regulations; meanwhile, the European Commission wants stricter financial regulations on the City of London. Markets are concerned about a disruptive break in trade relations and this will continue to weigh on GBP. All eyes this week on GDP Growth rate for Q4 and December’s manufacturing production data available on Thursday.

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