Home Daily Commentaries Break in the strong USD trend this week

Break in the strong USD trend this week

Friday 9 September, 2022

Daily Currency Update

At this time, the US dollar is losing against all the G10 currencies, even including the Japanese yen (which it had been beating earlier this week). Today, the USD is down by 1.4% vs the AUD, -0.45% vs the CAD, and -0.52% vs the EUR mainly due to profit taking. Federal Reserve Governor Christopher Waller said he favors another significant increase in interest rates when the Fed meets later in September and confirms the expectation of a 75 basis-point move. Despite today's light economic calendar, news came from the US real estate sector. In the US, household net worth decreased for the second quarter. Recession fears continue to pile up as inflation worsens. The US stock market, represented by the S&P 500 Index, being down 18% this year tells us that economic growth will be lower over the next few months. USDJPY fell towards 142.50 this morning after the USD was rejected technically speaking at the 145 handle two days ago. BOJ intervention talks set the pressure to the downside, where Finmin Suzuki, Japanese Chief Cabinet Secretary Matsuno and Bank of Japan Governor Kuroda signaled intervention risks. For instance, Suzuki said recent moves were somewhat rapid and one-sided, and he was eagerly watching markets.

Key Movers

The Canadian dollar falls against the G10 but rises against the US dollar after poor employment numbers. However, the USD/CAD fell towards 1.2979 early today (strong CAD versus a weak USD), and it consolidated around 1.3030 by Friday noon, representing a 0.5% fall only on Friday. The decline of 40k jobs versus an expected increase of 15K makes it three decreases in a row. The unemployment rate moved up from 4.9% to 5.4%. Not good. A 28k decline in construction jobs suggests higher rates are having an impact on real estate as well. We commented yesterday that the Canadian fundamentals seemed strong, and there is some evidence of overheating; however, interest-rate hikes might have started to cool the tight labor market. Hiring activities may be moderating. From a provincial perspective, employment fell most in British Columbia, Manitoba, and Nova Scotia, while it increased in Quebec. In Ontario, there was no change.

Expected Ranges

  • EUR/USD: 0.9894 - 1.0006 ▼
  • GBP/USD: 1.1496 - 1.1645 ▼
  • AUD/USD: 0.6747 - 0.6875 ▼
  • USD/CAD: 1.2986 - 1.3096 ▼