Daily Currency Update

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The U.S. dollar continues to gallop as the risk-off mode returns to the market and worries about employment numbers.

USD - United States Dollar

James Bullard, President of the St. Louis Fed set a negative tone this morning when he said, “...the shutdown can’t go on forever because if it does, deep into the second half, then I think you risk getting into a financial crisis or even a depression scenario.” He added that U.S. unemployment could reach 20 percent and go even higher as Americans continue staying inside to limit the spread of the coronavirus, but he sees it back under double digits by year-end.

According to the ADP employment report, private sector employment decreased by 20,236,000 jobs from March to April. The report utilizes data through the 12th of the month. However, the April report does not reflect the full impact of COVID-19 on the overall employment situation.

Key Movers

The Japanese Yen is the winner this morning, increasing 1.2, 1.13, 0.75, and 0.47 percent versus the Loonie, Pound, Euro, and U.S. dollar, respectively. As expected, the weak numbers in the U.S. ADP employment change can act as a predictor for non-farm payrolls this Friday (May 8th). The USD/JPY pair has shown for over a week now that the risks brought by Covid-19 to the economy are still in the markets, and volatility is edging higher with employment data.

The Loonie continues to decline, falling the most against most of its G-10 peers as crude oil fell around 8 percent and data showed U.S. companies cut a record 20.2 million jobs in April. The USD/CAD pair trades 0.7 percent higher, trading at an intraday high of 1.4156 at the time of this writing. As mentioned in recent daily commentaries, the Loonie crosses, such as the EUR/CAD, GBP/CAD, and AUD/CAD, will continue to trade in a wide and choppy range for at least the near-term, not only because of market volatility, but also due to the changes in BoC top management. The EUR/CAD, GBP/CAD, and AUD/CAD pairs rebounded 0.32, 0.05, and 0.42 percent, respectively. Canada 2-year yields exceed its U.S. counterpart by 12.5 basis points. Canada has no economic data for release today.

Expected Ranges

USD/CAD: 1.4050 - 1.4150 ▲

EUR/USD: 1.0727 - 1.0811 ▼

GBP/USD: 1.2298 - 1.2380 ▼

AUD/USD: 0.6375 - 0.6449 ▼

NZD/USD: 0.5973 - 0.6035 ▼