Daily Market Update

Dollar Takes a Break After Friday’s Rally

February 05, 2018

The U.S. dollar rallied on Friday to avoid an eighth consecutive week of losses.

USD

Non-farm payrolls impressed and a breakdown of the report showed stellar wage growth, lifting the greenback. However, speculation that the Fed will not have further support to normalize its monetary policy sent U.S. equity markets into a tailspin. The major indexes lost over 2% marking the worst day for stocks in two years.

The dollar is relatively quiet so far this morning as global equity markets are a sea of red.

Later this morning, non-manufacturing PMI is expected to show a modest improvement in January. The rest of the week is fairly light on the data front so expect the dollar to take its cues from events abroad.

 

EUR

The Euro has been unable to take advantage of strong data to stage a comeback against the U.S. dollar. Euro Zone PMI rose to 58.8 in January, the strongest level in over a decade. Italian data was better than expected and German service data was particularly impressive.

European Central Bank President Mario Draghi will be speaking later this morning. There is a chance Draghi could attempt to verbally intervene in currency markets to suppress the Euro’s strength.

 

JPY

The safe-haven Japanese yen has been the beneficiary of the global rout of equity markets. The yen gained for the first time in four days after the Japanese Nikkei 225 Average fell 2.6%., its biggest slide since November 2016.

 

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