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By xemarketanalysis February 1, 2019 10:50 am
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    XE Market Analysis: The Greenback Starts February on a Negative Tone

    OVERVIEW

    • The US Dollar Index reversed yesterday’s gains with a mixed jobs report.

    • British Pound comes under selling pressure over poor manufacturing PMI

    • NYMEX WTI Crude goes higher, trading near 9-week high, $54.30 a barrel

    HIGHLIGHT

    The Canadian dollar maintains a bullish grip against the greenback as we moved into the first trading day of February. The CAD strengthened by nearly 3.5% in January, mirroring strong upwards movement in oil futures. We expect the pair to consolidate at current levels as the market assesses today’s job numbers from the US. We'll keep an eye on key meetings between China and the US over trade talks.

    US DOLLAR

    The US dollar starts the first day of the month under pressure with the DXY Index down 0.1%. The jobs report was mixed, with the economy adding 304k jobs (above market estimates) but there were downward revisions to previous numbers. The unemployment rate also ticked up from 3.9% to 4.0%. We expect the market to trade with caution on these numbers. Meanwhile, NYMEX oil continues to march higher, up 1.20% on the day and lending support to commodity currencies. 

    BRITISH POUND

    The British Pound is in negative territory following the release of poor manufacturing data. The UK manufacturing PMI fell to a three-month low of 52.8, down from 54.2 in December as a result of Brexit uncertainty and signs of global slowdown. The PM is expected to negotiate a new deal with the EU which is likely to generate more volatility for the GBP/USD pair.

    EURO

    The Euro is a star performer among the G-10 currencies this morning, up 0.25% against the greenback. Dovish comments from the Fed and downward revisions of the US jobs data are weighing negatively on the US dollar. Meanwhile, the Euro area annual inflation is expected to be around 1.4% in January according to a flash estimate from Eurostat. We expect the EUR/USD pair to trade along general market sentiment.

    CANADIAN DOLLAR

    The greenback fell to session low against the Canadian loonie in the aftermath of jobs data. The USD/CAD pair is toying with the lower levels of 1.31, a key 200-day moving average. Strong oil performance (near a 9-week high) is the primary driver behind recent CAD strength.

    AUSTRALIAN DOLLAR

    AUD/USD is trading with a negative bias after the report showed the Chinese manufacturing came below market estimates. PMI was at 48.3 versus the 49.6 forecast, its lowest level since Feb 2016. The pair is now trading 0.3% lower, and we expect it to trade with a bearish tone going over the weekend.

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