Forex Flash: Dollar up as US jobs improve and Eurozone turns dovish – Wells Fargo
FXstreet.com (Barcelona) - USD is higher with most European currencies down today as solid US jobs data and dovish European developments have combined to dominate risk sentiment writes Nick Bennenbroek, Head of Currency Strategy at Wells Fargo.
Media reports suggest a majority of ECB policymakers are open to a cut in benchmark interest rates, while German output data surprised significantly to the downside. Germany's central bank (the Bundesbank) also reduced its 2013 GDP growth forecast to just 0.4% from a previous estimate of 1.6%. He continues to highlight that the Euro extended its decline slightly further after the US jobs report.
With output data also soft in the U.K. and Norway, the pound and Scandinavian currencies are weaker, while emerging European currencies are generally lower as well. The Canadian dollar is up however and Latin currencies are higher on balance, helped by encouraging economic indicators from the Americas. In addition to the steady U.S. jobs data, Canadian employment jumped in November and the jobless rate declined.
Looking to the week ahead, Bennenbroek believe that there is potential for some foreign currency divergence. The bias for European currencies could be steady to lower given recent soft data and dovish central bank sentiment. However, "the bias for commodity currencies, Asian and Latin American currencies could be steady to higher if China's November economic data prints favourably and the Federal Reserve continue with its easing stance at its monetary policy announcement."
Media reports suggest a majority of ECB policymakers are open to a cut in benchmark interest rates, while German output data surprised significantly to the downside. Germany's central bank (the Bundesbank) also reduced its 2013 GDP growth forecast to just 0.4% from a previous estimate of 1.6%. He continues to highlight that the Euro extended its decline slightly further after the US jobs report.
With output data also soft in the U.K. and Norway, the pound and Scandinavian currencies are weaker, while emerging European currencies are generally lower as well. The Canadian dollar is up however and Latin currencies are higher on balance, helped by encouraging economic indicators from the Americas. In addition to the steady U.S. jobs data, Canadian employment jumped in November and the jobless rate declined.
Looking to the week ahead, Bennenbroek believe that there is potential for some foreign currency divergence. The bias for European currencies could be steady to lower given recent soft data and dovish central bank sentiment. However, "the bias for commodity currencies, Asian and Latin American currencies could be steady to higher if China's November economic data prints favourably and the Federal Reserve continue with its easing stance at its monetary policy announcement."
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