The FX markets turns risk-off after less new jobs were added in the US last month than expected.
Recent Highs/Lows to note: AUD/USD1M-HIGH USD/INR2M-LOW USD/CAD2W-LOW AED/INR2M-LOW
The FX markets has turned risk-off after America announced late last week that only 235,000 new jobs were added last month. This was far below the consensus of 733,000 souring market sentiment and helping the safe-haven USD gain against its peers.
The Dollar Index (USD/X), a favourite gauge of the Greenback’s value against a basket of 6 major currencies, rose from 1M-LOWS after the job-report disappointment to around 92.5 on expectations the US Federal Reserve would delay the taper of its emergency stimulus.
The Australian dollar increased by 2.2% late last week to US74.5¢, with this latest burst coming after the poor US-jobs report. The Aussie hit 1-MONTH HIGHS against the USD, CNY, EUR, GBP and a range of currencies.
The always volatile Aussie then fell back this week as the Reserve Bank of Australia (RBA) rate decision confused the markets. The RBA kept its benchmark interest rate at 0.1% however, because of the Covid lockdowns across Victoria and New South Wales, it pushed back a review of its Bond buying efforts from November to early next year.
The Canadian dollar rose to a 2W-HIGH near US80 cents. This week the Bank of Canada holds its monetary policy meeting which will give some indication of the direction for interest rates and its bond purchases, a change to either would move the loonie.
USD/INR – The Indian rupee rallied to close at less than 73 to the US dollar on Friday. However, technical forecasters predict the rupee is set to weaken in September. The rupee powered ahead in August gaining almost 2% as speculation grew that the central bank was relaxing its control over the currency.
AED/INR – the Indian rupee gains against the dollar also affects its exchange rate against the dirham because of the UAE currency’s peg against the dollar. On Friday the rupee gained 20 paise against the dirham to close at 20.01.
The US dollar weakened due to fears surrounding regional banks, while the ECB offered a less hawkish than expected 25bp hike and the Swiss franc is in demand.
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