21.10.2016 Daily Market Analysis

The US dollar (USD) regained its mojo on Thursday as it traded higher against all major currencies. 

Despite mixed US data, sentiment around the dollar changed as Clinton edged over Trump on the final US presidential debate ahead of the November polls. Philadelphia’s Fed manufacturing came in at 9.7, higher than the general consensus estimates of 5.2 while Unemployment claims came in at 260000 with the market expecting 251000. The Fed’s consistent hawkish bias continues to make the USD attractive, especially after its recent retracement induced by profit taking. 

The Euro (EUR) understandably had an eventful day on Thursday. It first jumped higher as ECB President Mario Draghi took to the podium. But he failed to address rate cuts, easing or tapering, and the Euro tumbled to lows last seen in March this year. Draghi did not necessarily deliver a dovish statement, but his failure to talk on the vital topics was interpreted as encouraging the recent weakness of the Euro. 

The pound (GBP) also edged lower, albeit slightly. As well as a strong dollar, GBP was also weighed down by weak data. Month on month Retail sales came in flat at 0.0%, lower than the expected expansion of 0.3%. Last week’s GBP momentum has clearly faded and the focus will be on Brexit. 

The Australian dollar (AUD) and New Zealand dollar (NZD) also weakened against the dollar. AUD continued to be weighed down by weak data from Australia released this. A slowdown in China did not help the two currencies either. 

After weakening against the dollar yesterday, the Japanese Yen extended the losses to today as BOJ Governor Kuroda hit the wires in during early Asian session trading. Kuroda suggested that minor adjustments are needed on price outlook and also said that the time frame for achieving 2% price target could be revised at BOJ’s next meeting. 

On a light data day, the Canadian dollar (CAD) will be the main focus. The currency drifted lower on the back of a strengthening USD as well as falling Oil prices. But traders will now look to real fundamentals as Canada releases month on month Retail sales as well as consumer figures.