Daily Market Update

Dollar Holds Gains After Shockingly Poor Jobs Report

April 03, 2020

The U.S. dollar continues to flex its muscles this week despite a slew of historically poor domestic data as sliding global equities led investors to the safety of the greenback.

Overview

The dismal data got worse this morning after a shocking jobs report crossed the wire.  701K jobs were lost in March, compared to an estimate of a 100K loss.  Traders were already looking past this report and onto April since most of the furloughs and layoffs started during the second half of the month.  While we are still taking this print with a grain of salt, it gives us a glimpse into how bad the situation will eventually become.  The unemployment rate jumped to 4.4%, up from 3.1%.  We believe it will reach at least 10% by the end of the summer.  The job loss ends and impressive 113 consecutive months of gains.

The bad news is likely to continue later this morning as American PMI data is likely to take a beating much like Europe (see below.)  The PMI print is slated for 9:45 a.m.

 

What to Watch Today…

  • Service PMI at 9:45 a.m.

Complete Economic Calendar can be found here.

 

EUR

The Euro continued its fall against the U.S. dollar overnight.  European service and composite PMI showed a drastic slowdown in Europe in general and even worse effects in countries that experienced a strong lockdown.  Italian service PMI fell to 17.4, with 50 being the delineation between growth and contraction.

 

CAD

The Canadian dollar was the only major counterpart to buck the trend of widespread U.S. dollar strength.  The loonie has been propped up by a rollercoaster rally in the price of oil.  Crude opened 12% higher yesterday morning and popped over 40% higher at one point after a Trump tweet before retreating.  Oil is back on its front foot again after OPEC+ confirmed they will be meeting virtually on Monday.  There is heavy speculation that the cartel will promise supply cuts, driving up the price of oil and boosting the Canadian dollar.

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