The US dollar gave back some of its wins to its rivals, particularly the European currencies, when US equities also tumbled on risk aversion. The S&P 500 and Nasdaq closed roughly 3% lower for the day, as investors worried that higher borrowing costs would make it more difficult for companies to stay profitable when global demand weakens. Data from the US came in slightly worse than expected but traders appear to be waiting for the NFP release today, which might show a 203K gain in hiring for December.
The euro managed to stay resilient amid the downturn in global markets, advancing against the dollar, yen, and pound. Data from the region has been mixed, as Germany printed an impressive 1.5% rise in factory orders and a weaker than expected 0.2% uptick in retail sales. Germany and France are set to print their industrial production and trade balance numbers today.
The pound gave up more ground but managed a feeble rebound towards the end of the day, as cash flows away from China to the UK buoyed demand for the currency. The Halifax HPI report showed a 1.7% rise in home prices, stronger than the projected 0.5% gain. The UK trade balance is due today and a smaller deficit of 10.5 billion GBP is eyed.
The franc erased some of its recent losses as the Swiss economy also enjoyed increased safe-haven flows. Swiss foreign currency reserves actually declined from 563B CHF to 560B CHF, suggesting that the SNB is holding its fire. Switzerland’s jobless rate is due today and no change from the previous 3.4% reading is expected.
The yen still advanced against most of its peers but returned some of its recent wins to the euro. There were no major reports out of Japan yesterday but the currency is enjoying support from all the risk-off moves in the Asian markets. Only the leading indicators report is up for release today.
Commodity Currencies (AUD, NZD, CAD)
The comdolls went on yet another leg lower but were able to bounce back before the US markets closed. Canada’s Ivey PMI turned out to be a huge disappointment as it reflected industry contraction at 49.9 and today’s jobs data might yield another set of losses for the Loonie. Analysts are expecting to see a 10.4K rebound in hiring, which might be enough to keep the jobless rate unchanged at 7.1%.