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Decent retail data doesn’t lift US dollar

USD - United States Dollar

Two metrics measuring consumer spending and sentiment released this morning didn’t provide the positive bump to lift the US dollar.

Core Retail Sales rose 1.9% and higher than the expected 1.2%, according to the US Census Bureau. While its positive for the dollar to have better than expected retail sales, consumer confidence remains in the dumps. According to the University of Michigan’s Surveys of Consumers, their sentiment is largely unchanged from the previous months.

Surveys of Consumers Chief Economist Richard Curtin highlight two key takeaways from his monthly survey. First, consumers have become more pessimistic about the five-year economic outlook. And they are more optimistic about buying conditions.

On the back these two releases, the dollar remained weak compared to the euro, pound, Australian dollar and Canadian dollar.

Key Movers

The Australian dollar drifted lower through trade on Thursday, following a dour unemployment print. At first glance numbers appeared promising with 114,000 jobs added to the economy and only a marginal uptick in official unemployment levels, but a deep dive into the specifics paints a gloomy picture. Of the jobs added to the economy over 60% were part time and suggest a growing underemployment concern. While hours worked are increasing there is still a large portion of the workforce seeking more and as COVID-19 hotspots delay the broader re-opening of the economy it is likely we will see depressed labor market numbers through the months ahead, especially as this reporting period has not taken into account Melbourne’s stage 4 lockdown. Having drifted below 0.7150 the AUD touched intraday lows at 0.7135.

Trader’s sentiment has shifted as of late in the UK. GBP got a lift on Thursday after Irish Prime Minister Michael Martin commented on Brexit. He said that he thought there was a ‘landing zone’ for the UK and EU to come to an agreement. Coupled with the Michael Barnier’s positivity last week around a potential deal, there is a lot more optimism surrounding this round of negotiations, hence why GBP is still sitting above the 1.30 handle against the USD. The negotiations will kick off again Monday. Analysts predict a 2-3% short term dip with signs of a significant Brexit roadblock however an upside of 5-6% if things go well. This could leave GBP/USD trading just below 1.40 by the end of the year, which would be the highest since the Brexit vote in 2016.

Expected Ranges

EUR/USD: 1.178 - 1.183 ▼

GBP/USD: 1.304 - 1.314 ▼

AUD/USD: 0.713 - 0.716 ▼

USD/CAD: 1.320 - 1.326 ▲