USD falls amid labor market concerns
Daily Currency Update
The US Dollar Index (DXY) dipped below 104 this morning and traded around 103.880. Investors eagerly anticipated the monthly jobs report. This report is expected to shed light on the current state of the US labor market. Forecasts project an increase of 170,000 jobs in non-farm payrolls for November. There are also expectations for the jobless rate to hold steady at a 22-month high of 3.9%, and wage growth to slow to 4%, marking its lowest point since June 2021. This week’s data indicated a slowdown in the labor market, with initial jobless claims rising less than expected, increased job cuts announced by US employers in November, and job openings hitting their lowest level since March 2021.Key Movers
The euro continued its descent as it traded near 1.07830, reaching its lowest point since mid-November. This decline was propelled by dovish statements from the European Central Bank (ECB) conservative Isabel Schnabel, who reinforced expectations that the ECB might accelerate rate cuts. Schnabel’s remarks to Reuters suggested that further hikes were deemed “rather unlikely” following a recent Consumer Price Index (CPI) report which showed a dip in the inflation rate to 2.4% in November. This marked the lowest figure in two years, falling below the market consensus of 2.7%.The pound attempted to recover in the early European session, bouncing back from session lows at 1.2540, yet it faced resistance around 1.2600. Despite its efforts, the sterling continued to be dominated by a bearish outlook. The prevailing negative market sentiment, fueled by heightened concerns about a global economic slowdown in 2024, bolstered the safe-haven status of the USD. Governor Bailey of the Bank of England (BoE) emphasized the necessity of maintaining current interest rates for an extended period.
The USD/CAD pair traded near 1.3600 this morning as the Canadian dollar faced pressure from both low oil prices and the Bank of Canada’s (BoC) decision to maintain interest rates for the third consecutive time. The BoC restated its dedication to raising rates if needed, but tempered its previously hawkish stance by acknowledging that the economic slowdown is alleviating inflationary pressures. This shift could be an indication that interest rates might have reached their highest point in Canada. West Texas Intermediate (WTI) crude oil futures experienced a potential rebound, edging towards $70 per barrel. However, they continued to hover near their lowest levels since late June, following a five-session decline, attributed to ample global supplies and diminishing demand.
Expected Ranges
- EUR/USD: 1.0757 - 1.0797 ▲
- GBP/USD: 1.2547 - 1.2600 ▲
- AUD/USD: 0.6526 - 0.6592 ▲
- USD/CAD: 1.3562 - 1.3614 ▲